Scientific Games Wants Shot at Rhode Island Lottery Scratcher Contract, IGT Balks

Posted on: July 14, 2020, 10:22h. 

Last updated on: July 19, 2021, 02:52h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Scientific Games is asking Rhode Island lawmakers to open the bidding for a lucrative instant lottery ticket contract, one the gaming company says was awarded to rival International Game Technology (IGT) without a competitive bidding process.

Scientific Games Wants RI To Reopen Bidding
Rhode Island scratch-off lottery tickets at a local retailer. The state’s instant lottery business could be even better with the competition, says Scientific Games. (Image: MassLive.com)

Las Vegas-based Scientific Games is a global leader in gaming and lottery operations but the corporation lost the scratch-off business in the state in 2017. The Rhode Island Lottery shifted that deal to IGT without opening it up to other bidders. IGT Chairman Robert Vincent told the Providence Journal Scientific Games is engaging in a “last gasp” effort to win back the lost contract.

For a whole host of political or commercial [reasons], people try to pick apart the threads and … say, ‘Oh we could do this better or we could do that better,″ said Vincent in an interview with the newspaper.

IGT is in the process of working with the Rhode Island General Assembly on approval of a 20-year contract, which will cement the company’s status as the state’s dominant provider of slot machines and video lottery terminals (VLTs). Although Scientific Games competes with IGT in those arenas, the former is focusing solely on the instant lottery ticket business in Rhode Island.

Previously, there was controversy surrounding IGT’s accord with the state, because that deal also wasn’t open to competitive bidding.

Leveraging Jobs

Over the course of the wrangling over the contract — which has been going on for a year — IGT consistently plays the jobs card.

The company employs 1,100 workers in Rhode Island and previously claimed that if it doesn’t procure the 20-year deal, there can be no assurances it can maintain that level of employment in the state. Likewise, one operator that attempted to wrest the deal away from IGT said it couldn’t promise policymakers it could match IGT’s headcount in the state.

“There aren’t many companies here in Rhode Island that are knocking on the door, looking to guarantee 1,100 jobs, good-paying jobs at significant salaries … and a presence in Providence,” said Vincent to the Providence Journal.

Scientific Games has an instant lottery business in two New England states, Connecticut and Maine. Intralot has a comparable contract in New Hampshire and Vermont.

Losing Out to Massachusetts

Scientific Games claims that by confining Rhode Island’s scratch-off offerings to a single vendor, the state is losing business to neighboring Massachusetts.

A study conducted for Rhode Island by Christiansen Capital Advisors (CCA) notes that Ocean State adults spend an average of $93.30 per year on scratchers, which is in line with other states, but also the lowest tally in New England. Conversely, adults in neighboring Massachusetts spend an average of $520.50 annually on instant lottery tickets.

Scientific Games says over the past decade, Rhode Island lost $2.5 billion in opportunities, costing the state’s general fund $510 million, by only offering scratchers from one company.

The firm says if Rhode Island’s instant lottery business simply performed in line with the New England average, the state would haul in an extra $51 million per year for the general fund.