September 15, 2010

Illinois Lottery terminates SG contract following Intralot

Following a protest by rival Intralot, the Illinois Gaming Board has informed Scientific Games Corporation that it has terminated the six-year contract awarded to the company’s wholly-owned subsidiary, Scientific Games International, to provide a central communication system to manage every licensed video gaming terminal in the state.

Intralot had protested that its bid for the contract, said to be worth an estimated $90m, was substantially lower than the winning bid by Scientific Games after obtaining information on its rival’s bid by filing a Freedom of Information Act request last month.

As a result the Illinois Gaming Board admitted that it made miscalculations in evaluating the price portion of the contract proposals, due in part to the fact that the bid instructions resulted in both the board and applicants making assumptions that were not uniform.

Based upon these factors, the Illinois Gaming Board has now terminated Scientific Games' contract and remains committed to promptly rebidding the contract.

“We are disappointed by the decision of the Illinois Gaming Board; however we are confident going into the expedited rebid process,” said Michael Chambrello, president and CEO of Scientific Games. “We continue to believe that we offer the highest quality, service and value to the State.

“Furthermore, as we were in the initial stages of the implementation process, we are best positioned to promptly implement this important initiative and begin generating funds for the crucial capital construction that this program is to fund.”

With the Illinois Lottery also set to announce the winning bidder for the lottery’s ten-year private management contract this week, Intralot could yet be issuing a second formal protest against the lottery after being eliminated early from the bidding process. Just two bidders remain in the hunt for the ten-year lucrative contract – Camelot and Northstar Lottery Group.

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