Gambling company pushing Cayman lotto

TOPGamblinglottoLEAD

An international company that has
been reported to control some two-thirds of the world’s lottery gambling
operations has proposed several different gaming options for the Cayman
Islands.

According to information obtained
by the Caymanian Compass, reports containing those proposals were presented to
Cabinet members last month.

The company – GTECH Corporation –
has previously taken what Texas state police investigators referred to in 2006
as ‘sometimes questionable actions’ in pursuing and protecting business interests
and contracts.

In a July 2006 report presented to
the Texas Lottery Commission, the man who was GTECH’s chief executive at the
time noted that “several high-profile company officers have been fired for
unethical behaviour and that (the company’s) policy is that that type of
behaviour is not acceptable”.

In the report, then-CEO Bruce
Turner stated that GTECH no longer conducted operations in a
questionable manner.

The report was presented to the
Lottery Commission just before the buyout of GTECH by an Italian-owned firm
named Lottomatica. GTECH and GTECH Latin America are subsidiaries of
Lottomatica today. GTECH’s US base is in Providence, Rhode Island.

The Texas Department of Public
Safety – the state police in Texas – were charged by the state’s Lottery
Commission in 2006 with investigating GTECH’s business activities and the
“character, reputation and ethics of GTECH”, as well as those of the
Lottomatica company.

Investigators pointed out that,
during their probe, no “disqualifying criminal history” was found with any of
the GTECH personnel interviewed, including those who provided disclosure
statements to DPS officers. However, the report did express some concerns on
the part of the Texas officers.

“GTECH is a very aggressive
business entity that has a past history of protecting its contracts by lawsuit
or threat of lawsuit and of pursuing new contracts with sometimes questionable
actions,” the Texas DPS report read. “Texas is also well aware of GTECH’s
aggressive nature with some well-known and reported infamous historical and
unethical events here.”

GTECH was first given the Texas
Lottery contract in 1991 and has managed the state’s lotto gaming for nearly 20
years. Its contract is currently up for a 10- year renewal there.

According to the company’s website,
the corporation is now run by President and CEO Jaymin Patel. GTECH operates as
a gaming and technology company, while Lottomatica S.p.A remains one of the
world’s largest commercial lottery operators.

GTECH is governed by a board of
directors and Lottomatica is publicly traded and listed on the Italian stock
exchange.

Many of the former top executives
of GTECH are now listed as members of Lottomatica’s board of directors.

The games

GTECH’s proposal to Cabinet offered
a number of gaming options to Cayman, including Instant Ticket Lotto (known as
‘scratch tickets’), Super Lotto jackpot (similar to the Florida power-ball lottery
where a minimum top prize is often in the millions), and Pick Four or Pick
Three draw games (also similar to the Florida versions).

The company also believes the Keno
lottery game would be quite popular in Cayman. This is a game played in bars or
cafes where participants often spend time waiting for food or drink service.
Players can select as many as 10 numbers from a field of 80 and prizes are awarded
for players who match a certain number of picks to the draws that are displayed
on TV monitors.

Another game proposed is ‘doubles’,
where players pick two numbers from a field of 26 and then another two numbers
from an additional field of 26. Prizes are awarded again based on how many
matches the draw selected, with the top prizes going to those who have matched
the all four numbers.

According to the plan presented to
Cabinet, all hardware and tech support, as well as standard operations, would
be the sole responsibility of GTECH.

If the proposal is accepted by
government, GTECH officials estimated it would take the company four to six
months to set up its lottery systems. That would include prospecting for any
local lottery retail locations, of which the company estimated there would be
about 50 or 60 in the three islands. Individual lottery retail contracts would
have to be negotiated and signed.

Training of retail agents would
also have to occur.

“Based upon our global experience,
the operation of this lottery system in Cayman is expected to generate
(directly and indirectly) 125 – 150 incremental jobs or an average of two to
2.5 jobs for every terminal in operation,” the GTECH report stated.

The company proposed a 15-year
contract for gaming services with Cayman with certain provisions for extensions
if both parties agree.

GTECH officials estimated that
between 50 cents and 70 cents of every dollar spent on electronic and instant
ticket games would be paid out in prizes. The estimated earnings for government
would be 15 cents on the dollar for electronic games and 10 cents on the dollar
for instant tickets.

The company holding the gambling
license, GTECH Latin America in this case, would be paid between 7 cents and 22
cents on each dollar spent, depending on the game played.

The Brazil investigation

Texas investigators dug up reports
from 2004 in Brazil that GTECH had been “involved with individuals who had
allegedly solicited bribes from GTECH in order to renew the (lotto) contract”.
However, the company claimed that these allegations amounted to extortion attempts
by the local parties involved.

DPS investigators admitted the
Brazil situation was a complex affair where numerous revelations of corruption
involving political officials had been made. Most of those involved bribery by
officials of state-owned companies or contractors with the money going for use
in political campaigns.

“These were the conditions under
which GTECH operated since 1997 as the only provider of lottery services to
Caixa, the state-owned bank that runs the national lottery in Brazil,” Texas
investigators noted.

GTECH told Texas investigators that
it had hired a firm to look into the bribery claims. That firm, GTECH
representatives said, produced an initial written report and also apparently
made a Power Point presentation to GTECH board members. All requests by the
Texas DPS for GTECH to produce those reports went unanswered.

A number of other findings in
Brazil prompted concerns from Texas police investigators. 

In April 2006, GTECH legal counsel
disclosed to Texas DPS investigators that the company discovered an “improper
payment” of US$380,000 made on 10 February, 2003, to a non-profit company known
as the Brazilian Institute for Social Development. DPS personnel said Brazilian
police considered the institute a “paper company” and suspected it was used for
money-laundering and the making of illegal political contributions. The man
running the institute at the time had an extensive criminal history in Brazil.

GTECH’s then-CEO, Mr. Turner, noted
that the payment was made at the request of one of GTECH’s Brazilian attorneys
and that he simply didn’t know what the payment went for. Mr. Turner said GTECH
did not wish to pursue criminal action against that attorney because “it would
not accomplish anything”.

DPS investigators interviewed a
consultant retained by GTECH in Brazil during 2003 to assist in getting its
lotto gaming contract extended. The man, Anfranio Nabuco, claimed he resigned
from GTECH when he learned the company “was associating with ‘crooks’ and that
GTECH was holding secret meetings where he was not invited”. GTECH officials
said Mr. Nabuco was fired, but no explanation was given for his termination.

Speaking of the several incidents
identified in the Texas report, Mr. Turner admitted GTECH’s Brazil-based
employees may have “flown dangerously close to the sun”. 

Other jurisdictions

The Texas Department of Public
Safety report also noted that US$1.9 million in payments made by GTECH to a
California-based company named Flexx Avitar were diverted to pay officials on
the Trinidad and Tobago National Lottery Control Board.

“These alleged payments occurred
between 1999 and 2001,” the Texas DPS report noted. “According to media
reports, this is one of multiple investigations being conducted in Trinidad and
Tobago on GTECH.”

GTECH representatives explained
that the company had hired Flexx Avitar to provide community programmes in
Trinidad and the agreed amount had been US$2.8 million. This agreement was part
of their lottery contract extension.

Mr. Turner, the former GTECH chief
executive, told Texas investigators there was no written contract with the
Flexx Avitar company. Company board members indicated that they did not expect
GTECH would be found to have committed any wrong-doing.

In July 2006, Mr. Turner told Texas
investigators that GTECH’s board of directors had expressed concern about a
US$20 million loan the company made for a sports stadium in the Czech Republic.
This loan was negotiated around the time that the Czech Republic’s contract
with GTECH was being negotiated.

DPS criminal intelligence service
officers asked Mr. Turner for details of the US$20 million loan. He replied
that it was a “necessary business expenditure”.

There were also concerns raised
about a US$18 million, ten-year contract given to a consultant who performed a
“relatively little amount of work” for the money.

“Similar large payments for little
or no work have resulted in alleged illegal activity by GTECH personnel in some
countries,” the Texas Department of Public Safety found.

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4 COMMENTS

  1. There were a lot of allegations and concerns raised about GTECH in this article, and the whole time I was reading I could not help but think how biased a view Brent presented in the negative. There were a lot of them so I may be wrong.

    I dont care which company manages the lottery as long as it has nothing to do with the government. I seems to me however that GTECH is charging an exhorbitant amount to manage it. One particular point of interest was the unnecessarily large number of retail locations. 50 is WAY TO MANY!! Surely that could be cut in half.

    Personally I am really hoping that we can get some form of lottery legalised. I think we might have hope if we can just keep the fingers of the government and the church out of the pot. The government will missappropriate the monies and the churh is only worried about how their offering plates will suffer.

  2. This seems ideal for Cayman, a company who is already bribing officials. How can the government refuse they will get extra cash for their own pockets, its great.
    I am for a lotto or even a casino but please look at some other companies as well.
    MJ

  3. I live in the state of Oklahoma and have seen first hand what lotto leads to…. addiction, crime, family violence and domestic abuse.

    Gambling begins as a means of recreation. But does it invite any amount of peace? Does it result in mental satisfaction? The answer is negative. Research has rather shown that gambling can lead to harmful behavior in some people. Gambling has been proved as being an addictive activity. The addiction leads the gamblers to continue with gambling activities irrespective of whether they earn or lose in the deal. Gambling can in fact be a thoughtless splurge of money and valuables.

    Gambling is believed to lead the gamblers towards crime. The addiction gets on to them to such an extent that they fail in thinking wisely before acting due to which they might land up in worse situations. They may take wrong decisions in life. People who fall prey to gambling tend to drift away from their families and waste money on other bad practices. The treatment of such addicts again needs money. There is a lot of expenditure on curing the addicted gamblers of society.

    When gamblers indulge into excessive gambling activities, they tend to spend time and money at the expense of their jobs and time with family and friends. They tend to stay away from their near ones, resulting in distrust between them and their loved ones. Gambling at the cost of one’s job results in a decline in the quality of one’s professional life. Addiction to gambling is sure to hamper one’s career.

    People are seen taking to gambling as a way to run away for their problems, stress, anger and loneliness. Gamblers often exhibit mood swings and a strangely secretive behavior. They run behind gambling without the thought that gambling is actually inviting more problems in their life. Their unquenchable thirst of profits makes them continue wanting more. They start borrowing money and taking secret loans to bet money. In spite of the losses they face, they continue betting. Their addiction to gambling can leave them in bankruptcy.

    On looking at the negative effects of gambling, we realize that a little bit of gambling can serve as a recreational activity but its excess, resulting in addiction should be strictly avoided. (Taken from an article by Manali Oak)

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