For quite some time now, the Keystone State’s lottery has been searching for a partner that will serve both its games and gaming systems over the next decade. This search for partners has been both wildly controvertible and also quite costly.
The cost can somehow be justified since it is reportedly going to pay at least $1 billion over the entire decade within which the deal will be in place. This is, in fact, one of the state’s most lucrative long-term deals and there is a chance it could be subject to a two to four-year extension when the 10-year period comes to an end.
While it can be argued that the cost is an unavoidable expense, it would certainly not be that high (over $1.3 million) if the issue was not as contentious as it has proven to be. Two firms, Scientific Games and International Gaming Technology, have applied for the 10-year lottery servicing contracts and they have been at loggerheads for over a year. Each of the companies has even gone as far as tarnishing the names of the other through sponsored lobbying. By doing so, each of them is hoping to have better chances of being awarded the contracted by the Pennsylvania Lottery.
Burdening the Lottery Fund
As mentioned earlier, the lottery has spent over $1.3 million in its search – most of it has been used to pay consultants who are helping with the procurement. But where is this money coming from?
Well, all of it has been paid out from Pennsylvania’s Lottery Fund which is very concerning especially because money in that fund is meant to be used for support services in the state. These services range from property tax and rent rebates, in-home services, and low-cost subscriptions among others.
Unexpected Costs
According to the state lottery, they never anticipated spending as much as they have in their search for a partner. In fact, the lottery’s officials expected to only solicit for bids one time, but they eventually ended up doing it a second time.
A whopping $858,900 was spent during the first round – this was to pay for the services that were offered by Gaming Laboratories International, a consulting firm based in New Jersey. IGT disputed that round and the state opted to cancel the solicitation.
The second bid solicitation involved Treya Partners, a consulting firm that is based in San Francisco. So far, the cost of the firm’s services has added up to $487,500 and this amount is probably going to grow as the lottery is still using its services as they review and evaluate all of the bid requests responses from interested companies.