I've expressed my ambivalence about state-sanctioned gambling before. On the one hand, I've got enough civil libertarian in me to be wary of outlawing clearly popular activities like gambling. On the other hand, the gambling industry, especially the state lottery industry is such a sleazy combination of oligopoly and influence peddling that it's hard to see anything good in its expansion.
Over the last three decades, Gtech and Scientific Games have jointly generated several billion dollars in revenue as vendors to lotteries -- a business that flourishes at the crossroads of capitalism and public policy. In the process, the companies have steadily -- and often controversially -- evolved from minor suppliers into an influential oligopoly with a hammerlock on lottery operations.Every business has its titans, of course. But according to analysts, lottery officials and public documents, Gtech and Scientific Games have done more than just ride the gambling boom -- they have strong-armed their way to the top of a publicly sponsored industry that they now dominate. And with the domestic lottery market plateauing, both companies are focused on securing new footholds overseas.
Gtech, in particular, has been heavy-handed at times. According to court papers and regulatory filings, the company's representatives have drawn persistent allegations of bribing their way into contracts. Gtech officials acknowledge questionable practices by some employees, but say the problems are a thing of the past.
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To protect and expand their turf, Gtech and Scientific Games have tightly woven their interests into the nation's political fabric. Through the years, both companies have spent millions of dollars lobbying legislators and bankrolling lottery referendum proposals that have led to the establishment of lotteries. For example, Scientific Games spent about $1 million in 1984 supporting Proposition 37, which authorized the creation of a state lottery in California.
Often, the companies have also helped draft the very language used in lottery legislation. Some rivals complain that Gtech and Scientific Games have leveraged their political ties not only to win lottery bids, but also to ensure that contracts themselves are written in ways that discourage competition.