SPRINGFIELD -- Another setback to Illinois’ efforts to license video gambling machines means the system now won’t be operating before July.

SPRINGFIELD -- Another setback to Illinois’ efforts to license video gambling machines means the system now won’t be operating before July.

The additional delay was reported as Gov. Pat Quinn prepared to announce today which of two private companies has been selected to operate the Illinois Lottery.

The Illinois Gaming Board quietly posted a notice on its website saying it will rebid a contract to install a central communications system that will link thousands of video gaming terminals around the state. The $62 million system, which will be comparable to the way lottery terminals are linked, is essential before video gambling can operate legally in Illinois.

The Gaming Board had awarded a contract to Scientific Games of New York to install the system.

“In evaluating the price portion of the proposals, miscalculations were made, due, in part, to assumptions made by the Gaming Board and by vendors that were not uniform and not clarified,” the board’s statement said. “Based upon the foregoing, it is the Gaming Board’s responsibility, and in the best interest of the state of Illinois, to vacate the award, terminate the contract and rebid this solicitation.”

 

‘Significant scoring errors’

Gaming Board spokesman Gene O’Shea on Tuesday would not elaborate on the statement. However, he said a “best-case scenario” would have the system running by July 2011 — more than two years after Gov. Pat Quinn signed a bill making video gambling machines legal outside of casinos.

The decision to scrap the Scientific Games contract came after a losing bidder, Intralot, protested the award. Byron Boothe, vice president of government relations for Intralot, said the company discovered “significant scoring errors” after it obtained documents under the Freedom of Information Act about the way the contract was awarded to Scientific Games. The errors, he said, added about $38 million to the cost of Intralot’s bid.

“When anyone sits down and does the math on this, we win, and we win very handily,” Boothe said.

On Tuesday, Intralot filed another protest, this time saying there’s no need for a new round of bidding on the videogame connection system. Intralot attorneys said the miscalculations did not affect the other bidders, Intralot remains the low bidder, and Intralot should get the contract.

O’Shea said the Gaming Board had no comment on the latest protest.

 

Lottery management process

Intralot could also be a factor in the state’s efforts to hire a private management company to run the Illinois Lottery. By law, Gov. Pat Quinn is supposed to announce a winner of that contract no later than today. His office did not respond to questions Tuesday.

Intralot submitted a bid to manage the Lottery, but was not selected as a finalist. The two finalists are Camelot Illinois, a subsidiary of a company that runs the national lottery in the United Kingdom, and Northstar Lottery Group, a consortium of GTECH Corp., Scientific Games and Energy BBDO.

All three partners in the Northstar group already have connections to the Illinois Lottery. GTECH provides lottery terminals to the state, Scientific Games supplies instant lottery tickets, and Energy BDO is the state’s lottery advertising agency.

Intralot, the second-largest operator of lotteries in the world, filed an FOIA request to determine why it was bypassed as a finalist to become Lottery manager, but the state said it doesn’t have to release that information until after a contract is awarded. Boothe said Intralot will decide later whether to object to the Lottery manager selection process.

Boothe previously said Intralot’s concerns were “piqued” by the fact the lottery’s current vendors combined, as Northstar, to bid on the contract.

 

Illinois first in nation

State lawmakers authorized the Lottery to hire a private management firm with the express idea of increasing sales and profits to the state. Over the last four budget years, Lottery sales have hovered between $2 billion and $2.2 billion. The state has made from $622 million to $676 million annually over that period. Some lawmakers have estimated a private manager could boost profits by $150 million.

Illinois would be the first state in the country to hire a private manager for its lottery.

Money from video gambling is earmarked to pay for part of a $31 billion construction program approved by lawmakers in 2009. Revenue estimates for those machines range from $345 million to $640 million. Local governments where the machines are located would receive shares of that income.

Quinn budget spokeswoman Kelly Kraft said no capital projects will be affected this year because video gaming isn’t operating yet. Next budget year, which begins July 1, will be another matter.

“If video gaming is not up and running, the General Assembly will need to find another revenue source,” she said.

 

Doug Finke can be reached at 788-1527.