At a meeting tomorrow afternoon, the Arkansas Lottery Commission is likely to consider a settlement with Scientific Games International (SGI), the instant ticket vendor that’s received almost $7.5 million more than it would have had a contract approved by the Arkansas Lottery Commission and the Arkansas Lottery Commission Legislative Oversight Committee been honored. Among the terms SGI has offered in a proposed settlement is a $2 million credit as an incentive for the state to keep contracting with SGI.
Commissioner Bruce Engstrom helpfully boils down the matter at hand. “There are two basic questions that need to be answered: Did we get screwed? And, if we got screwed, are we stuck with it?”
Below, consideration of those questions and a few more.
Did the lottery get screwed?
According to Arkansas Lottery internal auditor Michael Hyde’s preliminary report, yes.
As I reported last week, on Aug. 18, 2009, the Lottery Commission agreed to a contract with SGI to provide the lottery with scratch-off tickets. Nearly a week later, former Arkansas Lottery Director Ernie Passailaigue altered the terms of the contract without approval from the Arkansas Lottery Commission or the Arkansas Lottery Commission Legislative Oversight Committee. From when the lottery began in September 2009 until Feb. 29, 2012, the difference between the original terms and the terms to which Passailaigue agreed have cost the scholarship lottery $1.95 million and lottery players $5.5 million, according to a lottery internal audit. Over the seven-year life of the deal, the altered contract will cost the Arkansas Lottery $21.7 million more than the original contract, according to Hyde’s estimates.