Lottery’s Computer Glitch Caused Sales Loss of $700,000

The worst computer breakdown in California Lottery history cost the state as much as $700,000 in lost sales this weekend and may result in fines of $200,000 against the company in charge of the computers, officials said Monday.

For a time during the peak betting period on Saturday, the crash affected all 4,375 Lotto 6/49 terminals--and thousands of players--from San Luis Obispo to San Diego.

The system stopped working at 5:50 p.m. Lottery Director Chon Gutierrez said preliminary numbers for part of the state shows that 60% to 70% of the terminals did not resume working until well after the 7:45 p.m. deadline for the betting.

“It was substantial,” Gutierrez said.

The latest crash is part of a problem that already has resulted in $1.7 million in fines against G-TECH Corp. of Providence, R.I., the company that has had the lotto contract since October, 1986, when the numbers game began.

Gutierrez is reviewing an audit by his own department and the state controller’s office that was prompted by allegations by two lottery employees that, the $1.7 million in fines notwithstanding, lottery officials have failed to get tough with G-TECH for repeated problems. The audit has not been made public.

Lottery officials say that in the last year, the computer system has been inoperable or unacceptably slow for 779 minutes of the 351,000 possible minutes that it could have been working, or 0.2% of the time.

The computer crash occurred when a newly installed telecommunications program for the main Southern California lotto computer at the lottery center in Whittier malfunctioned. That caused terminals throughout Southern California to stop accepting bets, lottery officials and others said.

Although the computer was working again by 6:02 p.m., the problem was exacerbated by a computer operator for G-TECH who installed an improper backup program. With the wrong backup program in place, the main computer was unable to recognize individual lotto terminals and refused to accept their wagers.

Because of the mistake, about 2,000 of the Southern California retailers with lotto machines could not link onto the main computer, leaving thousands of people unable to bet on the weekend drawing for $6 million, officials estimated.

As the 7:45 p.m. betting deadline neared and more people attempted to plunk down their dollars, the system became even more sluggish. The problem persisted until 10 p.m. on Saturday, when people were trying to buy tickets for the next drawing, when the system was shut off, lottery officials said. Saturday’s drawing was done on schedule, at 7:58 p.m.

“Throughout the evening, there were many terminals unable to accept wagers,” said Joanne Hoffmann, who is in charge of the lottery’s computer system and manager of the G-TECH division.

G-TECH faces a fine of “close to $200,000” as a result of the mishaps, Hoffmann estimated. The lottery’s contract with G-TECH allows it to charge the company $4,000 for every minute that the system is not working and $1,000 for every minute that the system is slow in taking wagers.

“We are in the throes of doing a detailed analysis (of the problem),” Hoffmann said.

An early analysis of betting on Saturday shows that lotto sales totalled $10.8 million, down by $700,000 from the previous Saturday, when the jackpot was a comparable $6.5 million.

“There’s little doubt that the error was caused by G-TECH software, compounded by G-TECH operator error,” said Pete Morrissey, senior vice president for the company’s Western regional operations.

The problem occurred because of what one official called a “self-inflicted virus” written into the new telecommunications program. The problem only became apparent Saturday evening.

Ironically, the program was installed to make the Lotto computer system more reliable. G-TECH computer experts were in California on Monday to install a patch that is expected to solve the software problem.

Although the G-TECH system has had other problems, no other has been nearly as noticeable because no other occurred at a peak betting period.

The worst crash before Saturday’s was in May, when parts of the system were down for about three hours. G-TECH and the lottery disagree over the cause of the problem. The system also had troubles for a week after the Whittier earthquake, which damaged the Southern California computer hardware.

The company maintains that the system is available “99.9%” of the time, but an executive said, “It’s a lot like flying an airplane. Sooner or later, something will happen.”

Meanwhile, officials said three players picked all six numbers correctly to win $2 million each in the game marred by the computer failure. The winning tickets were purchased in Long Beach, Yorba Linda and Anderson.