It's been a while. But the fact remains: It ain't over until it's over. And things are getting real interesting on the protest front in the protracted effort to name a private manager to run the Illinois Lottery. As you may recall, Gov. Pat Quinn (who could become a lame duck governor shortly) selected the Northstar Lottery Group to manage the lottery back on Sept. 15. Northstar is comprised of Gtech, Scientific Games and Energy BBDO/Chicago, all of which currently have contracts with the Illinois Lottery.
The other finalist for the private management contract, Camelot Group, and Intralot, which was dropped from contention early in the selection process, both subsequently filed formal protests with the Illinois Department of Revenue over various aspects of the way in which the bid process played out. Since then, there's been no clear indication of how Lottery executives and the Department of Revenue would deal with the protests. But out of the blue, it apparently became much clearer two days ago, at least for the Intralot Group.
Sources report there was a hastily-called private meeting between representatives from the Lottery/Department of Revenue and Intralot. To the apparent amazement of the folks at Intralot, sources say, the state executives suggested it might be in the best interests of Intralot to drop its protest by Friday, Oct. 15, or the Lottery would move forward with a plan to release more detailed information about the so-called probity checks that doomed the Intralot bid. A firm called Kroll has been handling all the probity checks for the entire private management bid process.
What Kroll determined to be a problem during the Intralot probity check, sources say, is the background of the Greece-based head of Intralot, a gentleman named Sokratis Kokkalis. A brief review of Kokkalis' background does suggest the man has had some questionable associations, including a stint as an agent with the East German secret police. He has also been indicted in several foreign countries, but cleared of all charges in every instance, sources tell us. What's more, Kokkalis never became a huge sticking point in 12 other United States lottery-related bids and 40 foreign bids in which Intralot has participated in recent years.
But now it appears Kokkalis has become the rod the Illinois Lottery and the Department of Revenue want to use to browbeat Intralot into withdrawing its protest. But we're told Intralot will have none of such tactics. If the state follows through with a plan to release the Kokkalis information Friday and use it to justify rejecting Intralot's protest, don't be surprised if the word "blackmail" is heard above the fray. It's unclear at this point just how Camelot's protest is faring. We will update that when we have more info to report.
Time, of course, is of the essence now, in terms of getting the private management contract signed. The November elections are just a little more than two weeks away, and if Quinn loses, it's going to make a lot of people in state government very nervous. And it just might have an adverse impact on the private management deal if it isn't signed and sealed by then.
On a separate matter, we heard from a Northstar representative regarding a previous posting suggesting Intralot had not filed any formal lottery-related protests elsewhere. The Northstar rep claimed that was not true and referred to three states in which Northstar alleged Intralot had filed protests over bids. We did some additional checking and found that two of the situations Northstar referenced weren't in fact formal protests of the sort that are underway in Illinois now. The third in Wisconsin in 2004, was indeed a formal protest, but Intralot withdrew it before any action was taken on it.