Hoosier Lottery to negotiate private vendor partnership with GTECH
Outsourced operations projected to generate $2.1B
11:12 AM, Oct 3, 2012
12:08 AM, Oct 4, 2012
The State Lottery Commission of Indiana will begin negotiating an outsourcing agreement with GTECH Corporation which could drum up $2.1 billion in revenue for Indiana.
The Rhode Island-based GTECH will help Hoosier Lottery with marketing, sales and distribution, officials said.
Hoosier Lottery officials said the 15-year agreement will be successful by increasing the Lottery's current contracted services from 88 percent to 95 percent.
"The commission was compelled by the potential value of this opportunity and the huge benefit to Hoosier taxpayers," said Hoosier Lottery Executive Director Karl Browning. "Every extra dollar that is generated is one more dollar for the State's General Fund."
GTECH was unanimously recommended by a selection team, which liked its credible and detailed business plan, officials said.
"GTECH demonstrated a commitment to bring a significant level of experience, innovation and accountability to the Hoosier Lottery," Browning said. "We look forward to creating a constructive and productive relationship."
Under the deal, GTECH will set a yearly income goal. If it exceeds that goal, it will take all of the next 5 percent in profits, with the state getting most of any amount above that. Failing to meet the goal will result in penalties of a similar figure.
But Lottery Director Karl Browning said the state is protected, and he said the private vendor will be able to do things to increase revenues that government can't.
"I can't find a scenario in which the state, on its own, can deliver to that green line in that period of time," Browning said.
Browning said GTECH will expand the player base by reaching out to Hoosiers who currently don't buy lottery tickets, it will seek to maximize the impact of advertising and promotions and it will seek to expand the retail network.
Many Hoosiers already think lottery tickets are available just about everywhere, but Browning said there are plenty of new opportunities.
Gov. Mitch Daniels called the decision one of the easiest and most obvious the state has ever had to make and said it will allow him to leave Indiana in the strongest possible financial shape.
GTECH will begin providing additional services to the Hoosier Lottery by February 2013.