Lottery Poorly Run, Main Contractor Alleges
Public schools lose nearly $1 billion a year because the California Lottery is among the poorest run and worst performing state lotteries in the nation, according to a scathing report by GTECH Inc., the lottery’s primary contractor.
The firm says inefficiency and flawed planning by state officials have made the California Lottery, which gives one-third of its revenue to schools, among the lowest-selling lotteries by several industry measures.
“If the California State Lottery continues operating its business as it has in the past, it will remain light years away from realizing its potential,” concludes the insider’s report, obtained by Associated Press.
Lottery officials discounted the GTECH report as inaccurate and self-serving.
GTECH, an industry leader that has run California’s Lotto and other online lottery games since 1985, says it prepared the unsolicited 150-page report to help the lottery and itself increase revenues. GTECH, based in Greenwich, R.I., gets 2.9 cents of every dollar wagered on the computerized games.
But Lottery Commission Chairman Arthur Danner accused GTECH of writing the report as part of a strategy to win a new contract next year.
“Throughout the report, GTECH is alleging that an outside entity . . . could better manage lottery operations and meet corporate objectives,” Danner said. That entity, he said, is “presumably [GTECH] itself.”
Danner, in a letter to GTECH, largely dismissed the report as filled with “inflammatory statements . . . based on misleading and, at times, inaccurate information.”
The report detailed what it calls the lottery’s failure to be a stable and dependable source of funds for public education.
A performance just matching that of 11 large states’ lotteries in 1995 would have produced $5 billion in sales, more than twice the actual sales, GTECH said. The income would have meant another $917 million for public education last year, GTECH said.
California ranked last in per-capita sales among the 10 largest lottery states in 1995. The next highest state in the ranking, Pennsylvania, achieved 85% higher per-capita sales than California, according to the report.
California also ranked 22nd out of 37 for expenditures from net income last year, GTECH said.
Danner discounted GTECH’s assessment.
“Comparisons of California with the other top 10 states based on population are often misleading and uninformative since only two of the 10 are Western states,” Danner said.
The lottery business “is quite different between Western and Eastern states due to geographical considerations, economic realities and a variety of social factors,” he said.
“When compared to other Western states, California performs well,” Danner said.
