New York Lottery Announces GTECH Wins Award for New Full Service System Contractor

The New York Lottery today announced the award of a new contract for its full service lottery system to GTECH Corporation, a company with 6,200 employees in 50 countries serving 100 gaming customers. The new contract allows the Lottery to introduce a completely new generation of technology with faster, easier to use touch-screen terminals, and a more reliable telecommunications network. It also provides for higher levels of security and redundancy, and the capacity to handle the extremely high levels of transaction volumes generated daily by the Lottery.

The contract is for the technical infrastructure of the entire Lottery system, including computer terminals at 16,000 Lottery retailers, the telecommunications network connecting the terminals to central data sites, the primary and backup computer centers, ticket warehouses, hardware, software and related reporting, accounting and marketing services.

The initial term of the contract is for seven years beginning March 1, 2010, with a possible three year extension. The new contract takes over from an existing contract, which expires on February 28, 2010. Under the old contract, the Lottery's systems and telecommunications costs would have been $104 million in fiscal year 2010-11, but with the new contract these costs will go down to approximately $73 million.

"The Lottery is a 24 hour-a-day, seven-day-a-week business. We process over 5.5 billion transactions a year, transactions that must be secure, impenetrable and 100 percent accurate. Our system needs to be reliable and extremely high performing," said Gordon Medenica, Director of the New York Lottery. "We average almost $20 million a day in sales, and the cost of even the slightest system downtime is enormous."

GTECH will provide all capital necessary to purchase and install the new equipment. They will be paid primarily on a percentage-of-sales basis, which lowers the risk to the Lottery. "This is another great example of the public-private partnerships that Governor Paterson has encouraged to make state operations more efficient and customer friendly," Mr. Medenica added. "The new system will give us proven state-of-the-art technology at significantly lower cost."

GTECH, a $1.4 billion international company, currently provides computer services to 26 of the 42 state lotteries in the United States and to over 50 additional lotteries around the world. GTECH is a wholly-owned subsidiary of Lottomatica Group, a publicly traded corporation based in Italy. GTECH's offering includes significant subcontracting services from IBM, Hughes, UPS and Intel.

"We are honored to have the largest lottery in North America and one of the most respected in the world, the New York Lottery, remain as our valued customer," said GTECH President and CEO Jaymin B. Patel. "Lotteries from around the world look to the New York Lottery as a model for balanced and sustainable growth. As the Lottery's online vendor, GTECH will continue delivering the maximum player experience, integrity, security, and profitability."

Today's award was the culmination of an extensive competitive procurement process that required comprehensive responses to a detailed Request For Proposals issued in October 2008. The Lottery was advised by The Battelle Memorial Institute and its evaluation committee was co-chaired by Lottery Deputy Directors Gardner Gurney and Bill Murray. The evaluation committee included Lottery executives from systems, operations, telecommunications, marketing, finance and legal, as well as a representative from the State Division of the Budget. "We're proud of the excellent job done by the evaluation committee," said Mr. Medenica.

All three of the major companies that provide lotteries around the world with computer services were involved in this bid process. Intralot, Inc. and Scientific Games Corporation chose to combine their resources into a single bid headed by Intralot, Inc.

The contract must still be approved by the Office of the Attorney General and the Office of the State Comptroller.

The New York Lottery is the largest and most profitable in the United States. It is the seventh largest lottery in the world, behind six sovereign nations. Last year, the Lottery had $7.5 billion in sales and returned $2.6 billion in profit to school districts in New York State. The Lottery's sole mission is to earn money for education, and last year it provided over 13 percent of total state funding to local school districts. It operates two main lines of business; 1) traditional lottery (which includes draw games like Lotto, Mega Millions and Take 5 and instant scratch off games like Win-for-Life and Cashword), and 2) video lottery (which includes casinos at Yonkers, Saratoga and six other locations around the State).

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