A lucrative, decade-long contract to operate the Maryland Lottery is up in the air after state officials took an unusual step to award and then rescind the contract to an embattled multinational gaming company this summer.
Haggling over who gets to run Maryland’s lottery system is often fraught, with the spending and collection of hundreds of millions of taxpayer money on the line.
But the latest developments have cast a different kind of uncertainty. They’ve raised questions about not only the company that officials recommended but also the abrupt about-face the lottery agency made two weeks later.
Now, behind-the-scenes conversations about restarting the process altogether are raising further concerns that an extension — combined with legal action threatened by the companies — could draw out a process that key leaders have complained has already been too long and problematic.
In a letter addressed to the lottery agency and obtained by The Baltimore Sun, representatives for the current lottery vendor expressed concern that the state would rebid the contract, calling that possibility “a complete U-turn, with no reasonable explanation or basis in law and fact.”
“It is hard to imagine a more arbitrary, capricious, or unreasonable action by a state agency that would represent a clear breach of the public trust,” representatives for Scientific Games, which, as of now, is set to win the contract as the firm with the second lowest bid, wrote on Aug. 15.
Barbara Romzek, a retired public policy professor and expert in government contracting, said the best course of action could be to start over if government staff realized they made mistakes.
Lotteries are “huge financial enterprises,” and redoing the contracting process — even multiple times — could be a legitimate exercise to benefit taxpayers, she said. But it would also be naive not to ask whether “political favoritism” is also playing a role, like if certain companies are more politically connected than others, she said.
“The tough question to get at is, ‘Which is it?’” said Romzek, a former dean of American University’s School of Public Affairs. “Is it pulling back the contract for good reasons, or is it pulling back the contract because someone wasn’t happy?”
Falling short
Maryland’s lottery vendors are responsible for a vast portfolio — daily draw games, jackpots like the Powerball and Mega Millions, scratch-offs and more.
Only a few companies are capable of running such systems, and Atlanta-based Scientific Games has done the work in Maryland for the last two decades.
At its last meeting on July 15, Maryland Lottery and Gaming Control Commission members unanimously recommended Intralot, a Greece-based gaming company, take over the next contract for $260.4 million over 10 years.
The Baltimore Sun reported on Intralot’s involvement in the confidential bidding process a few weeks earlier. The company had significantly increased its lobbying efforts in Maryland, The Sun found. At the same time, the company paid a $5 million fine in Washington, D.C., for what the district’s top prosecutor called “an elaborate scheme” to deceive city officials and circumvent contracting laws related to a sports betting contract worth as much as $215 million.
The company denied wrongdoing. And when Maryland Lottery officials picked Intralot at a public meeting in July, the open discussion did not mention the D.C. allegations. It focused instead on Interlot’s cheaper price tag compared to the other offers — $371 million from the current contractor, Scientific Games, and $641 million from IGT Global Solutions — as well as the thorough technical review.
But on Aug. 1, the agency said in a statement it was rescinding the recommendation to the Maryland Board of Public Works after further reviews showed Intralot’s proposal “did not fully meet all requirements of the [request] and state procurement law.” Scientific Games, whose offer received the second-highest rating, became the recommended contractor again, the agency said.
The agency did not explain what prompted it to reverse its directive, though a public statement from Intralot said it was related to assertions that the company was not meeting the minimum thresholds for engaging with local subcontractors.
Such subcontracting arrangements — particularly with minority-owned businesses — have been a sticking point for Maryland leaders.
Both Comptroller Brooke Lierman and Treasurer Dereck Davis, at the last extension of the contract in December 2024, harshly criticized lottery officials and Scientific Games for failing to meet a quota of 20% of its work going to minority-owned businesses.
“The impact of Scientific Games is not something I am sympathetic to,” Lierman said at the time. “They are a multibillion-dollar company and they can figure this out, right?”
Despite lottery officials saying there were improvements, Davis said he was “not impressed.”
“My concern is what type of hold does the incumbent have over the agency?” Davis said.
Davis was unavailable and Lierman declined to comment on the latest developments. Gov. Wes Moore, the other member of the Board of Public Works, has not openly commented on the process and did not return a request for comment Friday.
A familiar bidding war
The latest bidding war isn’t the first between Intralot and Scientific Games in Maryland.
When the last 10-year contract was moving through the process, Intralot’s $212 million offer was $50 million less than Scientific Games’. But unlike this year, lottery staff who vetted the proposals didn’t pick the cheapest option — partially because the structure of the entity Intralot used “kept changing on us,” the Maryland Lottery director said at the time, in 2017.
That structure included VSC, the subcontractor that Intralot would go on to use in D.C. and that also eventually settled with the district attorney general.
It’s unclear if Maryland’s lottery commission members considered the D.C. situation or Intralot’s prior proposals when making its decision last month, though Romzek said looking at companies’ track records is essential when handing out large contracts.
“That should be done. Just like if you’re going to an auto mechanic, you ask, ‘Did they do a good job last time? Did they do a good job on my neighbor’s car?’” Romzek said. “So it’s the same with these larger contractors.”
Intralot did not respond to questions from The Sun, referring instead to public statements that claim its latest proposal — which is not available publicly — included nine local minority business enterprises. It was not clear if VSC was again part of the proposal from Intralot or the proposal from Scientific Games, which has used VSC for some of its Maryland work in recent years.
Next steps
The agenda for the lottery commission’s next meeting on Thursday does not list the contract as a point of discussion.
An agency spokesman did not answer a question about whether it could be discussed in a closed session, which is allowed for legal advice and confidential matters related to procurements. The procurement “remains pending,” he said.
Intralot has said it is reserving “all its legal rights and intends to pursue every legal remedy available to protect the interests of its shareholders.”
Scientific Games, meanwhile, has raised alarms that the commission might back-track again. In the Aug. 15 letter sent by its Maryland-based law firm, the company wrote that it believed Intralot representatives had improperly “discussed and/or encouraged” the lottery agency to cancel the bidding process instead of awarding the contract to Scientific Games.
The letter vowed to “vigorously defend” the Aug. 1 decision to rescind the award to Intralot and give it to Scientific Games, including by challenging “any such cancellation or rescission.”
Formal protests by either company — or an actual resetting of the entire process — could ultimately delay the final vote by Moore, Lierman and Davis on the Board of Public Works. The current Scientific Games contract is set to expire in May 2027, but transitioning to a new vendor could take a year or longer.
That could be a problem for Davis and Lierman, who expressed little interest in waiting much longer when the temporary extension last December brought Scientific Games’ contract to a lifetime total of $411.9 million.
“This has got to be your biggest contract, and it has got to be your focus,” Davis said. “You’re not out solving the energy crisis the state faces, or the budget deficit, none of that. You have one job, as my kids like to say … So the day everybody came in in January of 2023 [when the new bidding process started], that should have been, ‘Let’s get moving on this.’ And nobody did anything.”
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