Indiana’s lottery commission voted Wednesday to hire a private company to take over its marketing and other services in the hopes that it will boost the lottery’s profits by about $100 million a year.
The commission voted 3-0 with two members absent to approve a contract with Rhode Island-based GTECH that is expected to make $1.7 billion in profit over five years — a $500 million increase over state projections. GTECH already provides and maintains vending machines for the Hoosier Lottery.
The new contract will have the company take over lottery marketing, sales and distribution services. GTECH would make its money from a management fee that has yet to be settled and a share of the lottery profits.
The state received $188 million in lottery proceeds last year.
Officials expect the new deal with GTECH will increase profits by about $500 million over the first five years of the 15-year contract, said Karl Browning, the Hoosier Lottery’s executive director. Over the 15-year life of the contract, the amount of money the lottery nets the state is expected to increase by 50 percent, he said.
“I can’t find a scenario in which no matter what, the taxpayer isn’t better off,” Browning said.
Gov. Mitch Daniels, who has championed corporate involvement in government services, praised the commission’s decision.
“In eight years, this may be the easiest and most obvious decision the state has had to make,” Daniels said in a statement. “With this contract, the only question is how much more money Indiana will receive than under the current system.”
GTECH was selected over a proposal from New York-based Scientific Games, which currently provides the central online lottery system, terminals and instant tickets for the Hoosier Lottery.
Private companies already handle 88 percent of lottery operations and the outsourcing proposal would increase that to 95 percent, Browning said last week. Indiana would retain full ownership and control of the lottery, he said.
Browning said part of the increased revenue would come from a plan to “broaden the player base,” which would likely be done by expanding sales to groceries, big box stores and discount stores.
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