Friday, May 04, 2007

Lottery Lunacy

Taiwan's upcoming sports lottery was recently the subject of a planned tender by GTech, as the Taipei Times reported last week.

GTECH Corp, a US gaming solution provider, said yesterday it would team up with Taipei Fubon Bank (台北富邦銀行) to tender for the license to operate a planned sports lottery.

GTECH partnered with Taipei Fubon Bank through Lottery Technology Service Co (樂彩公司), a joint venture with Acer Inc, to distribute Public Welfare Lottery tickets from 2002 to last year.

Acer will not join the partnership for the sports lottery, as the world's fourth-largest PC vendor said it wants to focus on its core business, said Simon Chuang (莊俊元), account general manager of GTECH Global Services Corp's Taiwan branch.

"It is a challenge [to operate a sports wagering system ... We are uniquely positioned to provide this service," Robert Vincent, vice president of GTECH corporate communications, told a press conference yesterday in Taipei.

Sports wagering requires much more sophisticated technology than common lotteries, including setting the odds at appropriate levels -- which vary depending on the sport -- individual team performances, players and even the weather, Vincent said. It also carries more management risks for the operator, he added.

Declining to provide an estimate on the market size of sports betting because of the sensitive timing, Vincent said the market "will be substantial and rival other similar markets."

A sports lottery committee under the Cabinet said last week it will announce the requirements for the bid in the middle of next month and invite tenders in the following two months.

GTech is quite a fascinating little enterprise. The Wiki entry, clearly a simple uploading of a news one pause.

But the history gets deeper and murkier. There are plenty of published news reports about GTECH scandals that the current GTECH management calls 'in the past'. Some notable items:

J. David Smith was GTECH's national sales director when he took almost $170,000 in kickbacks from lobbyists in New Jersey. In 1996, he was convicted of fraud and other charges that sent him to prison for five years. As a result of this the Texas lottery commission initiated an investigation after Smith's pre-sentence report implicated him in another kickback scheme with the company's Texas lobbyists. No charges were filed over the Texas allegations. But the Texas probe led to the 1997 firing of Texas Lottery Director Nora Linares after officials learned that a friend, whom she later married, had secretly worked as a $6,000-a-month GTECH consultant. Linares sued GTECH and the commission, claiming she had been fired for political reasons. In an out-of-court settlement, GTECH paid her $435,000, plus $290,000 for her lawyers. The company admitted no wrongdoing, and a short time later, Gtech -- despite the ongoing scandals -- got its contract renewed over two lower bidders.

In 1997, GTECH fired its chief lobbyist in Texas, a certain Mr. Ben Barnes. Here is how that tangled web was woven. Ben Barnes, a prominent Texas Democrat and a former speaker of the House in the state legislature, told friends he used his influence to get George W. Bush a guard slot after receiving a request from Houston oilman Sid Adger. Barnes said Adger told him he was calling on behalf of the elder George Herbert Walker Bush, then a Texas congressman.

Under investigation in Texas in 1997, GTECH fired Barnes, and paid him a $23 million severance, and GTECH was awarded the aforementioned contract. Linares' successor, Lawrence Littwin started an aggressive investigation but was fired in less than 5 months. Littwin also sued, claiming he was fired after looking into possibly illegal political contributions by GTECH via the $23 million severance to Barnes and that he was fired without just cause by Bush appointee Harriet Miers, in October 1997 after five months on the job. It contended that Gtech Corp., which ran the state lottery and until February 1997 employed Barnes as a lobbyist for more than $3 million a year, was responsible for Littwin's dismissal.

Littwin's lawyers suggested in court filings that Gtech was allowed to keep the lottery contract, which Littwin wanted to open up to competitive bidding, in return for Barnes's silence about Bush's entry into the Guard.

Barnes and his lawyers had denounced this "favor-repaid" theory in court pleadings as "preposterous . . . fantastic [and] fanciful." Littwin was fired after ordering a review of the campaign finance reports of various Texas politicians for any links to GTECH or other lottery contractors. But Littwin wasn't hired, or fired, until months after Barnes had severed his relationship with GTECH.

Littwin won a $300,000 settlement from GTECH, which included a confidentiality order as part of the deal. Littwin was fired by the then chairwoman of the Texas Lottery Commission, Harriet Miers. One of the reasons Miers backed off from her 2005 Supreme Court nomination was potential questions about her handling of GTECH and the Texas lottery.

Catch Harriest Miers' name in there? And George Bush's national guard slot? Life sure makes some funky connections....


阿牛 said...

The company in question seems as shady as they come, but I think a lottery for Taiwanese baseball is absolutely critical. The main complaint baseball fans have today (besides the level of local play being below that of the MLB) is that the gambling has made them lose faith people are playing a fair game.

If there were a legal way to gamble on baseball games, and the gangs had no incentive to run gambling rackets, then you'd get lots more interest from the Taiwanese people, who love to gamble and who don't want the game to be full of cheaters.

. said...

Hi Michael,

Not sure if you've seen The Economist Correspondent's Diary this week.
(Can't work out how to shorten the address into a word link on the comments page)


Anonymous said...

Any way to stop these idiots?

Anonymous said...

Re: Gtech, I wouldn't be surprised if Taiwan did not do any due diligence on this group. Then again, it may have been some type of deal to gain bush's favor.

BTW: Another Bush/China connection that I just came across is here.

"So it’s farewell to Chinese Foreign Minister Li Zhaoxing, who is to be pensioned off at the age of 66 (a year beyond the official ministerial-level retirement age of 65).

Obviously, Li has been at the focal point of a number of controversial incidents relating to Chinese foreign policy over the years and his successor will likely face similar challenges. Given the current state of US-China relations, it’s no surprise that the new man will be Yang Jiechi, a former ambassador to the US and a long-time friend of the Bush family (he was George H.W.’s translator for a China visit in 1977)."

(definitely not good for Taiwan)