International Game Technology
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GTECH Corporation, a company based in Providence, Rhode Island, United States, became a wholly owned subsidiary of Lottomatica, S.p.A., on August 29, 2006. Lottomatica is the license holder for the Italian National Lottery; and the De Agostini Group, a privately held Italian holding company that is Lottomatica's majority shareholder. The merger of GTECH and Lottomatica included a cash transaction valued at approximately $4.7 billion on a fully diluted basis, including the assumption of debt. This transaction has created one of the world's leading gaming solutions providers, with significant global market share and the broadest portfolio of technology, services, and content solutions. GTECH manages many state lotteries in the United States and also has contracts to manage local and national lotteries in Europe, Australia, Latin America the Caribbean and Asia.
GTECH's ticker symbol on the New York Stock Exchange was GTK, however the stock has been delisted in the United States and Lottomatica S.p.A has been listed on the Mercato Telematico Azionario in Milan as LTO, and managed by Borsa Italiana since May 17, 2001.
According to a GTECH news release, Lottomatica, along with GTech now control 63% of the worldwide online lottery business. The companies employ more than 6,300 people worldwide and earned in excess of $US 1.5 billion in 2005. GTECH, now a Lottomatica subsidiary, maintains operations centers in Australia, Belgium, Ireland, Poland and Brazil.
GTECH moved its corporate headquarter from its campus in West Greenwich, to a 10-story building in downtown on Waterplace Park that cost over $10 million. Employees moved into the new headquarters scheduled in November 2006, and GTECH laid off 200 employees in December 2006. Company executives claimed the layoffs had nothing to do with the acquisition.
GTECH has hired and fired 4 Chief Technology Officers in between 2002 and 2006. After the last CTO was unceremoniously let go, a candidate from Citizens Financial accepted the position and bailed at the last moment in the summer of 2006, and another candidate, who accepted the CTO position and was scheduled to start on Dec 11, 2006, backed out on December 6th.
As of 2005, the company began diversifying into casino management in the United States. On March 2, 2005, the Commonwealth of Pennsylvania announced that it had selected GTECH to supply a central control computer system that will monitor slot machine gaming for the state.
In September 2005, the company announced that it was putting itself up for sale. According to press reports, this was done in response to an unsolicited bid for the company by the private equity arm of Goldman Sachs. In January 2006, it was announced that GTECH would be purchased by Italian companies Lottomatica SpA and De Agostini SpA. Lottomatica operates Italy's Loto and De Agostini is a privately held holding company and Lottomatica's majority shareholder. GTECH survived the sale and will operate as a business unit of Lottomatica. CEO Bruce Turner will become the CEO of Lottomatica, and the CFO and COO will also assume equivalent roles in the new company.
For a company dealing with hundreds of millions of dollars each week, GTECH is embroiled in scandals remarkably often. One of its founders, Guy Snowdon, then the chairman of GTECH, was found guilty in 1998 of libel when Richard Branson of Virgin Airlines accused Guy Snowdon of trying to bribe Branson. Aggressive lobbying and bribery have always been the modus operandi of Guy Snowdon and GTECH.
As a result, GTECH corporate officers now have to attest to a set of 36 items each month to the UK Lottery, and Camelot Group audits GTECH for compliance.
Critics
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Before the sale to Lottomatica could be concluded, almost all of GTECH's U.S. customers conducted due diligence, either directly by a state agency in combination with an accounting firm, or by proxy through [www.naspl.org North American Association of State and Provincial Lotteries]. Texas sent a team of Department of Public Safety investigators to Rhode Island, Rome, and elsewhere, and the report was not pretty, although predictably nothing came out of this report; Texas and the other states approved the sale.
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, Ben Barnes. A prominent Texas Democrat and a former speaker of the House in the state legislature, he 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.
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. [citation needed]