Two foreign firms among four interested in state lottery

Two foreign companies—one based in Australia, the other in the United Kingdom—are among four firms competing for a chance to become the first private manager of Indiana's lottery.

Four interested firms submitted information to Hoosier Lottery officials for background checks in anticipation of submitting private management proposals, The Indianapolis Star reported Saturday. Their final proposals were due Friday.

Gov. Mitch Daniels and state lottery officials are hoping a private firm can boost revenue for the state, which last year received $188 million in lottery proceeds.

The companies competing to win a private management contract with Indiana include Tatts Group Limited, a Melbourne, Australia-based company that has several lottery licenses in Australia.

Also in the running is Camelot, a U.K.-based firm that runs Britain's national lottery and was a finalist for Illinois' private lottery management contract that last year became the first of its kind in the U.S.

Two American firms are also in the running, including GTECH, a Rhode Island-based company that's one of the nation's largest lottery vendors. The firm already provides and maintains instant ticket and vending machines for the Hoosier Lottery.

Scientific Games International, a New York-based firm that's another major U.S. lottery vendor, also is seeking the contract.

The company currently provides the central online lottery system and terminals for the Hoosier Lottery, and is the minority partner in Northstar Lottery Group—the company that won the Illinois lottery management contract.

Indiana officials announced in July that they would seek a 10-year contract for lottery marketing, sales and distribution services. The state's lottery commission expects to choose a winner by Sept. 26 and sign a contract by Nov. 1.

Hoosier Lottery spokesman Al Larsen said boosting the Hoosier Lottery's net income performance is "the entire focus of this process."

"What a private vendor can provide is world-class experience and the ability to deploy significant resources, assume risk and concentrate rapid execution in a way that a state organization cannot," he told the Star in an email.

The head of the Illinois Lottery has criticized Indiana's search for a private lottery manager, saying its process mirrors Illinois' problem-plagued lottery outsourcing effort that saw revenue fall millions of dollars short of what the vendor promised.

"It's as if they didn't learn anything," Illinois Lottery Superintendent Michael Jones told Indianapolis Business Journal.

The Illinois auditor general's office faulted officials in that state for failing to properly administer their contract with Oliver Wyman, the New York-based consulting firm that advised Illinois. The firm and its subcontractors earned $4.9 million, with some work billed at $648.75 an hour.

Indiana also has hired Oliver Wyman as its lottery adviser.

Northstar Lottery Group, which won the Illinois contract, sought a change in terms just a year into its contract with the state. The result could mean Illinois will owe it millions, rather than the company having to pay fines for failing to bring in the profit promised in its bid. That dispute is in mediation.