Rep. Pete Gallego Asks Lottery Commission for GTECH documents

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If you think you are having a bad day, just be thankful you aren't a Gtech lobbyist. 


BOR has learned that Chairman Pete Gallego asked the Texas Lottery Commission for documents yesterday in response to a letter he received last month from Chairman Garnet Coleman (that BOR reported on here).  The entire Gallego letter to the Texas Lottery Commission is attached.


There are three primary issues that seem to be the focus of the Gallego letter.


First, Gallego asks for information regarding the recent RFP process where Gtech employed the same company who the Texas Lottery Commission employed to write the bidding rules.  Some might argue that keeping a consultant on your payroll that is simultaneously helping write the rules for a contract you are bidding on might represent a conflict of interest and give one bidder an unfair advantage over others.  I wonder why the Lottery Commission neither policed nor punished this action?  Gallego wants documents relating to that question. 


According to the Gallego letter:


Legislators must have access to current and accurate information in order to make informed decisions regarding all available state revenue during the next session.  Hence, I write to request information from you and the Texas Lottery Commission that essentially falls into three separate categories.


I want to be sure your recent RFP process was fair and untainted by even the appearance of impropriety.  I was surprised to read that the same company that you hired to help write the RFP was also being employed by the current operator of the lottery (who is also bidding for the new contract).  Given this set of facts, I want to guarantee that no bidder obtained an unfair advantage over others.  Please send me any documentation you have available regarding the RFP process, including the individuals who helped write the process.  I ask that you include all documentation which shows weaknesses in the process that might allow for inappropriate conduct or conflict of interest in the RFP process.


The second issue Gallego raises is pretty straightforward.  If the statistics outlined in this Austin American-Statesman article are anywhere close to accurate, then by any objective measurement, Gtech is doing a terrible job managing the Lottery.  The empirical evidence regarding who is playing the lottery, how much poor players are spending, the number of tickets being sold, and the amount of money going to schools all suggest that Gtech is significantly underperforming.  The numbers are the numbers – and Gtech can't hide the fact that they are taking more money from poorer people to put less money into public education. 


I wish I could get paid $100 million to underperform this badly.


According to the Gallego letter:


If it is your opinion that the current operator is operating the lottery at an optimum level, please send me any information and data you deem relevant to both defend and to counter that argument.  I would like from you some context to the disturbing numbers and data points referenced above in the Austin American-Statesman article.  I'd also like some explanation as to why it appears that you are relying on poorer Texans to spend more money on lottery tickets, only to then give less money to our schools.  If these figures are accurate, what is the current vendor doing to rectify this trend?


The third issue for which Gallego seeks information relates to promises Gtech is making to other states where it hopes to run lotteries.  For example, if you look at what Gtech is promising to Illinois, why can't they do that exact same thing in Texas?  Why can't they promise more for less in Texas?  I promise you, with a $30 billion deficit, and a new crop of right-wing extremists Republicans chomping at the bit to cut to the bone spending on public education, Texas kids could benefit from a more efficient and effective lottery operation.


According to the Gallego letter:


If the current operator of our lottery can promise more revenue to a different state at a lesser cost, why doesn't Texas have that same deal?  Who was responsible for negotiating this contract? Please give me your thoughts on how Texas, during these dire economic times, can get more for less, especially since it appears that Gtech is offering a better deal elsewhere.


I will be interested to see how the Texas Lottery Commission handles this request for information from Gallego.  I think they would be wise to cooperate fully with Chairman Gallego and his Select Committee because he can cross-examine with the best of them.  We will post any response from the Texas Lottery Commission and/or Gtech that we are able to obtain.

You can read the entire letter from Rep. Pete Gallego here (pdf).


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