Pennsylvania is launching iLottery,online casino,sports betting

Scientific Games And IGT Warring For Massive PA Lottery Contract

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No fiscal year in Pennsylvania Lottery history performed greater than the 2017-18 period.

  • $4.2 billion in sales
  • $2.8 billion in instant scratch-off game sales
  • $2.7 billion in awarded prizes
  • More than 9,300 PA Lottery retailers combining for $224.1 million in sales commissions
  • The seventh-straight year the PA Lottery produced more than $1 billion to for state senior citizen programs

For the better part of 40 years, since inventing the industry’s modern-day secure scratch-off ticket in 1974 and providing instant tickets to the state, Scientific Games has been a part of the PA Lottery family. Naturally, the Las Vegas-based gaming entertainment company felt compelled to weigh in on such historic feats.

From Scientific Games Senior Vice President, Global Lottery Systems Pat McHugh, in a statement at the time:

“We are proud that our partnership with the Pennsylvania Lottery has resulted in one of the highest performing lotteries in the world.”

For the past decade, Scientific Games has been the gaming provider for the PA Lottery. For over 40 years, Scientific Games has supported the lottery’s mission, according to Susan Cartwright, VP of Corporate Communications for Scientific Games. It did so by “investing products, technology, and services” to maximize lotto revenues and further help those senior citizen programs.

Now, Scientific Games looks to continue that relationship when the next 10-year contract begins in 2019. But the company will have to fight for it.

Not one, but two Lottery contracts up for grabs

The current contract to provide the gaming system and instant ticket game services expires in June 2019. The PA Lottery issued a Request for Proposals (RFP) in March to elicit bids from companies interested in providing the lottery central system and/or instant games. The RFP was canceled in early June but is anticipated to resume soon.

The PA Lottery broadened its gaming portfolio this year, introducing Keno and online lottery sales, which was available after Pennsylvania lawmakers introduced a set of gambling expansion laws last fall. Also implemented was iLottery — a platform for instant-win games online and via the PA Lottery app.

PA Lottery spokesman Gary Miller emphasized that there are two contract opportunities up for grabs: one to provide lottery sales systems for the state, the other for scratch-off games.

Miller said the goal is to have the new contracts in place before June 30, 2019.

Track record shines for Scientific Games

Over the past 10 years, Scientific Games has certainly helped contribute toward the PA Lottery mission. The company has also reaped the rewards.

During the life of the current contract, according to a PennLive story, Scientific Games has raked in more than $484.1 million and helped generate $15.8 billion in lottery ticket sales. For its instant game services, it has pocketed $320.4 million while producing just shy of $26.2 billion in ticket sales.

So, for its part, Scientific Games received in excess of $800 million. According to PennLive, that doesn’t include the $12 million over the next two years for its online platform to run the iLottery games.

Scientific Games, however, does not focus on the payoff from holding the PA Lottery contract. Rather, it emphasizes the humanitarianism of its partner.

“The Pennsylvania Lottery is considered one of the most innovative and successful lotteries in the U.S.,” a Scientific Games representative said in an email. “The contract award would provide the opportunity for Scientific Games to continue investing in technology and innovation that drive profits for the Lottery, and help increase funding for meals, transportation and other important services and programs for seniors in Pennsylvania.”

In a press release last week announcing the state’s historic fiscal year, PA Lottery executive director Drew Svitko credited Scientific Games for such record-breaking success.

“We are very grateful for the support of our business partner Scientific Games over the last decade, from highly successful instant games, to the technology innovation the company invested in to help us modernize with our popular mobile app and convenient new point-of-sale programs like cashless lottery payments and player self-service machines.”

A PA Lottery challenger lurks in shadows

Certainly, Scientific Games holds a close relationship — and a decorated track record — with the PA Lottery. That said, according to Miller, there will be no favoritism when choosing the next service provider.

“We’re entering the procurement process without any preconceptions,” Miller said. “We will weigh each proposal on its merits. We look forward to reviewing each proposal that is received.”

Miller said there are “three or four companies in the industry that could be capable of performing the scope of work” asked by the PA Lottery. He added that any proposal from a qualified bidder is welcome.

Likely, though, there is only one other company that could beat out Scientific Games for one or both contracts. And it actually nearly happened a decade ago.

The last time around, IGT Global Solutions Corp. (then known as GTECH) was awarded the PA Lottery’s 10-year gaming systems contract. However, during negotiations, issues with retailer terminals promised by GTECH arose. In the end, the state Department of Revenue voided the deal and a rebidding began. Ultimately, Scientific Games landed the contract.

It was a protest by IGT that led to this summer’s RFP cancellation. According to PennLive, IGT claimed there were biases “written into the request for proposals” that favored Scientific Games. The state halted the RFP, determining that there needed to be “additional clarification to allow suppliers to properly respond to the RFP,” revenue department spokesman Jeff Johnson told PennLive.

Based out of Providence, Rhode Island, IGT has become quite the player in the Northeast gaming market. In Pennsylvania, for example, it is in line to be a sports betting partner with Presque Isle Downs. IGT also powers the FanDuel Sportsbook at Meadowlands Racetrack in New Jersey and developed games for 888 Casino out of the Garden State.

So who’s it going to be?

Scientific Games has the history. But IGT has a growing resume and enters as the original PA Lottery selection a decade ago.

For either, and for the state, another potential record-breaking era sits around the corner. Especially if the popularity and success of Keno and iLottery — and, soon, virtual sports games.

Keno generated nearly $12 million in ticket sales within its first two months of existence this past spring. The online instant win games that went live in May resulted in over $20 million in ticket sales through June. The 2018-19 fiscal year could near $1.3 billion to go toward senior citizen programs, according to the state’s Independent Fiscal Office.

Will it be up-and-coming IGT that takes over one or both PA Lottery contracts? Or will Scientific Games be chosen again, this time with the first pick, to continue what it has helped the state build?

From Scientific Games:

“Scientific Games is the best partner for the Pennsylvania Lottery to accomplish its mission of maximizing proceeds to benefit older Pennsylvanians. Our consistent investment in technology and innovation and new product introductions has resulted in one of the highest performing lotteries in the U.S. and the world. … Scientific Games’ investment in technology and innovation has helped the Pennsylvania Lottery accomplish more. We are supporting the Lottery’s recent modernization efforts through new technology, solutions and game entertainment products like Keno, iLottery online/mobile games and coming summer 2018, virtual sports. Keno sales are strong and the Lottery’s launch of iLottery is considered the most commercially successful in the U.S. to date.”

About

Grant Lucas is a longtime sportswriter who has covered the high school, collegiate, and professional levels. A graduate of Linfield College in McMinnville, Grant has covered games and written features and columns surrounding prep sports, Linfield, and Oregon State athletics and the Portland Trail Blazers throughout his career.