UPDATE: Lottery Commission sets meeting on vendor contract | Arkansas Blog

Thursday, December 4, 2014

UPDATE: Lottery Commission sets meeting on vendor contract

Posted By on Thu, Dec 4, 2014 at 11:51 AM

It would appear Lottery Director Bishop Woosley has a deal to present to the Lottery Commission today on a contract extension for Intralot, the Greek concern that makes about $11 million a year providing certain types of lottery games. A special telephone meeting is set for 2 p.m.

The lottery has been trying to get a lower rate from Intralot, but differences have emerged on not only the rate but the effective date — now or nine months from now — and for how many years of the contract.

At last report, the lottery figured it could save more than $1 million from a renegotiated contract, money that goes to college scholarships.

I've requested e-mail among commissioners and from Woosley on the issue. It sounds to me like commissioners have been discussing the deal among themselves in e-mails, something that comes awfully close to having non-public meetings of a public body.

UPDATE: Here's how Intralot spells out the offer:

Intralot offers the following in response to your email of December 1, 2014, time stamped 8:29 AM, and requests that you submit this offer to a vote of the ALC at its earliest convenience;

1. The Intralot contract shall be extend for three (3) years after current agreement expiration until August 14, 2019; and

2. Intralot will continue to be compensated at the rate of 2.45% of instant and on-line sales until July 1, 2015; and

3. Thereafter until the extension years expire on August 14, 2019, Intralot shall be compensated at the rate of 2.165% of instant and on-line sales; and

4. Intralot will provide a one-time marketing allowance of $100,000.00 to be used by the ALC during the term of the agreement and its 3 year extension. Any funds not used at the expiration of the extension shall be forfeit; and finally

5. Intralot will continue to provide annually ,through the extension years, a $25,000 commitment for System audit fees and a $25,000.00 commitment for charitable contributions supported by the ALC.

This is a complete and an integrated offer. Counter proposal or rejection of any one or several terms constitutes a rejection of the entire offer.

Any term or condition not contained herein shall be deemed not included in this offer.

Woosley said the lottery had thought it had a deal for a 2.11% rate, but it and Intralot had a misunderstanding on effective date. Under the lottery's understanding of the earlier deal, the new deal is worth $1.6 million less for the life of the contract. Under Intralot's understanding, the new deal is worth $656,000 more.

In all, over the life of the contract, he said savings would be about $5 million on sales of $422 million.

PS — There's urgency in this meeting. A legislative committee will hear a study from a British gambling company, Camelot, that is expected to raise some questions about lottery operation. It can be expected to review the cost of vendor contracts. We've reported before that Intralot charges Arkansas a higher percentage than other states, but it has defended that by saying it provides add-on services and made iniitial equipment investments that make the comparison misleading.

UPDATE: The 2 p.m. meeting was canceled at 1:50 p.m. No explanation given.

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