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LOTTERY
INSIDER
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| Vol. 32 No. 6 -- Monday August 8, 2005 |
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Washington’s Lottery Invites GTECH to Negotiate New Long-Term Lottery Contract
WEST GREENWICH, Rhode Island (August 2, 2005) -- GTECH Holdings Corporation (NYSE: GTK) today announced that its wholly-owned subsidiary, GTECH Corporation, has been selected by Washington’s Lottery to negotiate a new long-term contract for a new online and instant lottery system, terminals, communications network, and ongoing services. The award follows a competitive procurement and is subject to the execution of a formal contract. “GTECH offered Washington’s Lottery proven capabilities, solutions, and quality of services that will meet the Lottery’s vision for the future, enabling them to respond to market challenges with accelerated innovation,” said GTECH President and CEO W. Bruce Turner. “Enterprise Series is the industry’s most powerful and flexible integration platform, using best-in- class components and unifying decision-management, leading-edge technology standards, and enterprise-wide data accessibility. “With the solid foundation of ES, and our retailer-friendly Altura terminals and highly-reliable communications network, we stand ready with the most proven solutions that embrace creative new game content and distribution capabilities—solutions that will drive further growth and return more value to the state of Washington,” continued Mr. Turner.
GTECH has been a lottery technology partner to Washington’s Lottery since 1995. Further details of the award will be made available upon the successful negotiation of a new contract. GTECH is a leading gaming technology and services company. With more than $1.25 billion in annual revenues and 5,300 people in over 50 countries, GTECH provides integrated technology, creative content, and business services to effectively manage and grow today’s evolving gaming markets. In targeted emerging economies, GTECH also leverages its operational presence and infrastructure to supply commercial transaction processing services. For more information about the Company, please visit GTECH’s website at http://www.gtech.com. SOURCE: GTECH Holdings Corporation media
release. SANTA FE, New Mexico (July 28, 2005) -- State legislators were told today that strong sales of in-state games helped drive the New Mexico Lottery to its second-best year of sales. Lottery Authority CEO Tom Shaheen said that sales of all games exceeded $139 million, while net revenues (profits) earmarked for the Lottery Success Scholarship program were $32.2 million, topping $30 million for the third straight year.
All financial data for fiscal year 2005 are preliminary and unaudited. Shaheen, appearing before the Legislature's interim Lottery Tuition Scholarship Study Subcommittee in Santa Fe, said that gross sales for the 2005 fiscal year ending June 30 were $139.2 million [see chart below]. Four New Mexico-specific lottery products --- instant tickets (Scratchers), Roadrunner Cash, 4 This Way! and Pick 3 --- combined to set records. Powerball, the traditional lotto game sold here and 28 other U.S. lotteries, had a sales slump in most states, including New Mexico. "The majority of Powerball jackpots won during the fiscal year were well under $100 million," said Shaheen. "Even though the starting jackpot of $10 million is a lot of money for most people, the fact is that many players don't buy Powerball tickets until jackpots reach the $100 million mark." Instant ticket sales surpassed $90 million in one year for the first time. In-state online game Roadrunner Cash exceeded $9 million, an all-time high for this eight-year-old game. Newly introduced 4 This Way! combined with Pick 3 to exceed last year's Pick 3 sales by 41 percent for a total of just under $3 million. Shaheen told legislators that lottery sales remain strong, and the monthly transfers of net revenues to the State's Lottery Tuition Fund, which supports the Lottery Success Scholarship, are also healthy. Lottery profits averaged almost $2.7 million each month during the fiscal year. Currently, the Lottery Success Scholarship covers 100 percent of in-state tuition at 25 New Mexico public college campuses. But despite the Powerball setback, Shaheen said that New Mexicans are still playing the lottery and winning. A record $400,000 Roadrunner Cash top prize, the launch of New Mexico's first Scratcher with a $500,000 top prize and the launch of a new nightly game with a $4,000 top prize were among the reasons.
"Even after Powerball sales dipped, New Mexico Lottery players still won more than $76.2 million in prizes during the fiscal year," Shaheen added. That included:
In April, the 29 lotteries that operate Powerball announced game changes, which Shaheen said should increase prizes, sales and Lottery Success Scholarship profits. The starting jackpot will increase to $15 million from the current $10 million, and will increase by no less than $5 million for each drawing. The annuity option will also be changed so that players will receive an annual payment that increases each year. Players can still elect to receive the jackpot as a lump-sum cash payment. Fifteen New Mexico Lottery players have won the multi-million dollar Powerball jackpot: 14 in an office pool and another as an individual. The New Mexico Lottery has already raised almost $250 million for public education, including more than $182 million for the Lottery Success Scholarship program. Well over 35,000 students so far have received their in-state college tuition paid by the Lottery Success Scholarship, with an updated student count pending. SOURCE: New Mexico Lottery media
release.
INTRALOT Signs Important Agreement with Egypt Posts ATHENS, Greece (July 28, 2005) -- INTRALOT and Egypt Posts signed yesterday an important agreement concerning the development of a modern National Network for the provision of value added services and games organization. The signing ceremony was attended by the Egyptian Minister of Communications and Information Technology, Dr. Tarik Mohamed Kamel Mahmoud, who declared: "We welcome INTRALOT Group in Egypt and we believe that this agreement will be for our mutual benefit.”
"This agreement is intended to establish a long-term and mutually advantageous cooperation between INTRALOT Group and Egypt Posts and will contribute to the improvement of Egyptians’ everyday life, by simplifying transactions”, Mr. Constantinos Antonopoulos CEO of INTRALOT commented. More specifically, the project concerns the development and management of an integrated system with a communications network among all branches of Egypt Posts, to conduct financial transactions, such as payment of utility, taxes and credit card bills, ticket booking, driving registration issuing, etc. INTRALOT will install the on-line central system, based on LOTOS platform, which will include the management software, the telecommunications network and the terminals, in all Egypt Posts’ branches and related points of sale. Egypt Pots currently have more that 3.400 branches allover the country, while the new company aims at expanding the network by increasing the number of points of sale to 10,000. Egypt Posts constitute one of the most important institutions in the country, since they combine the postal activity with that of a bank, through Postal Savings organization. They employ 45,000 employees and allocate 12 millions active accounts, which correspond to market share of more than 50% of the Egyptian market.
The initial investment will be €10 million and the project will be implemented and operated by a new Joint Venture Company, in which INTRALOT Egypt participates with a 85% share and Egypt Posts with 15%. The project is expected to begin at the 1st Quarter of 2006. About INTRALOT INTRALOT, a public company listed on the ASE, is a leading supplier of integrated gaming and transaction processing systems, innovative game content and value added services to state-licensed gaming organizations worldwide. With 31 subsidiaries, 7 business offices and 1,500 people in 29 countries and revenues of € 328,4 million, INTRALOT’s footprint straddles five continents. The company currently ranks 3rd on revenues and 2nd on profits among lottery suppliers worldwide. SOURCE: INTRALOT (www.intralot.com) media release. Scientific Games Reports Second Quarter and Six Months Financial
Results NEW YORK, USA (July 28, 2005) -- Scientific Games Corporation (NASDAQ: SGMS) reported that second quarter 2005 revenues increased 11% to $197.4 million from the $178.1 million reported in the second quarter of 2004. Net income increased 27% to $24.8 million or $0.27 per diluted share in the second quarter of 2005 compared to net income before preferred stock dividend of $19.5 million or $0.21 per diluted share in the second quarter of 2004. EBITDA (earnings before interest, taxes, depreciation and amortization – see the following EBITDA reconciliation) increased 15% to $58.8 million in the second quarter of 2005 from $51.3 million in the second quarter of 2004. For the first half of 2005, revenues were $382 million compared to $363.6 million for the first six months of 2004. Net income was $45.8 million or $0.50 per diluted share for the first half of 2005 compared to net income before preferred stock dividend of $39.9 million or $0.44 per diluted share in the first six months of 2004.
EBITDA increased to $110.1 million in the first six months of 2005 from $104.3 million in the first six months of 2004. Lorne Weil, chairman and CEO, said " We experienced strong growth overall in the second quarter despite the continued weak performance of our racing related businesses. Second quarter EBITDA of these businesses declined by roughly $4 million from the second quarter of last year, the equivalent of approximately three cents of earnings per share after tax in the quarter. During the third quarter we will be implementing an operational restructuring of our North American and European racing businesses with the goal of returning profitability to prior levels, beginning in the first quarter of 2006. We believe that the performance of these businesses will remain relatively weak for the balance of this year and will cause our overall earnings to be below expectations during that period of time.” “At the same time, the performance of our lottery related businesses was very strong in the second quarter. Lottery-related EBITDA grew by 25% year to year from $44.8 million in 2004 to $56.0 million in 2005; and if we exclude from 2004 the EBITDA from the Florida online contract that came to an end during the first quarter of 2005, lottery growth was over 30%. Growth was particularly strong in our instant ticket Cooperative Services business and in the sales of instant ticket licensed games, driven especially by our proprietary "Hold'em Poker®" licenses and related patents.” “The second quarter was very active as well in the area of new business. We were awarded the full services online/instant contract in Catalunya, Spain; the Staatliche Germany online lottery Toto-Lotto terminal order; the instant ticket contract in Portugal; the Ohio Cooperative Services agreement; and the Shanghai online lottery and keno contract. Most recently (although after the end of the second quarter) Scientific Games announced that it had been awarded the California instant lottery ticket and services agreement worth $33 million over its four-year term. Together these wins augur well for growth in 2006 and beyond.”
As of July 1st, Mike Chambrello joined the Company as president and COO of Scientific Games. “Mike brings 20 years of lottery experience to Scientific Games. We expect Mike will play a key role in our primary objectives of continuing growth and improving profitability. Mike's focus on worldwide operations will allow me to spend more time on strategy, corporate development and organizational planning. I know that all our employees, customers and shareholders join me in welcoming Mike to the Scientific Games family.” About Scientific Games Scientific Games Corporation is the leading integrated supplier of instant tickets, systems and services to lotteries, and the leading supplier of wagering systems and services to pari-mutuel operators. It is also a licensed pari-mutuel gaming operator in Connecticut and the Netherlands and is a leading supplier of prepaid phone cards to telephone companies. Scientific Games’ customers are in the United States and more than 60 other countries. For more information about Scientific Games, please visit our web site at www.scientificgames.com. SOURCE: Scientific Games Corporation media release. Contact Information: Lisa Lettieri, Phone: (212) 754-2233.
BALTIMORE, Maryland (July 27, 2005) -- The Maryland Lottery closed its fiscal year breaking several records once again. Total sales and revenue generated for the State reached unprecedented levels in the Lottery’s 32-year history. Revenues also increased in most game categories while new records were set in terms of prizes awarded to players, commissions earned by Lottery retailers, and contributions to the State. Year-end highlights include:
“The Lottery is an important revenue source for the State,” commented Governor Robert L. Ehrlich, Jr., “The growing success of our games is the result of effective and innovative products, efficient operations, and a commitment to responsibly fulfilling the expectations of players.” Lottery Commission Chairman, Frank Bonaventure states that he is very pleased with the success of the Lottery games. “We want players to view our games as enjoyable recreation. Given our year-end record revenues, we have been successful in our efforts to make the games fun and interesting.”
Though sales in most categories continued to climb, specific games finished the year with tremendous gains. Keno and Keno Bonus, combined, experienced this year’s biggest sales increase at nearly 17%, while Mega Millions produced a substantial sales increase of 10%. Sales of Pick 3 and Pick 4 combined increased by more than 9%, bringing in an additional $21.6 million. Total scratch-off ticket sales grew by 10%, resulting in an additional $36 million in sales. Extreme Cash was the Lottery’s top-selling scratch-off ticket this year. According to Lottery Director Buddy Roogow, extensive research and development efforts, creative marketing strategies, and interactive promotions contribute to these top sales levels. “We are always looking for opportunities to expand our selection of games and lead the industry in introducing new game concepts. Many of our games are further supported by exclusive promotions giving players additional entertainment opportunities,” said Roogow. SOURCE: Maryland Lottery media
release.
Virginia Lottery Profits Set Another Record; Raises More Than $423 million for Year RICHMOND, Virginia, USA (August 2, 2005) -- Just a year after posting record profits, the Virginia Lottery has again beaten the odds, and the winner is Virginia’s K-12 public schools. Lottery Interim Executive Director Donna M. VanCleave announced today that the Virginia Lottery’s net profits for fiscal year 2005 totaled $423.5 million. By constitutional mandate, every penny of that profit goes to K-12 public education in the Commonwealth. “Through creative efforts and hard work, the Lottery has set yet another record,” Governor Mark R. Warner said. “These profits will help bolster our historic investments in public education and support our innovative educational reforms.”
“This is exciting news for the Commonwealth,” said VanCleave. “By launching new and popular games, as well as maintaining record-low operating expenses, we were able to increase our contribution to Virginia’s public schools by more than $15 million.” Total Lottery sales for the fiscal year ending June 30, 2005 also set a record: nearly $1.334 billion, exceeding last year’s amount by more than $71.5 million. This marks the fifth consecutive year that the Lottery sold more than a billion dollars under former Virginia Lottery Executive Director Penelope W. Kyle’s leadership. Kyle’s successful tenure running the Lottery ended on May 31 2005, when she departed to become president of Radford University. Profits for education and overall sales are just two of the records that the Lottery set in fiscal year 2005. Sales of Pick 4, Mega Millions and Scratchers all set records. The Virginia Lottery’s approximately 5,000 retailers earned a record $76 million and players won an all-time high of $774.6 million. There was also one number that has never been so low: the cost of running the Lottery. The Lottery spent just a nickel out of every dollar on operating expenses, even though state law allows up to 10 percent. “We are very proud of our low operating expenses,” said VanCleave. “Every dollar we save in operations is another dollar for Virginia’s public schools.” One of the most interesting stories of the year for Lottery players was the number of times that players won very large payouts in the Pick 3 game. On five separate occasions during the year, the same three digits were drawn as winning numbers in a single Pick 3 drawing (for example: 8-8-8). Since triple numbers are always the most popular played in the Pick 3 game, players won big. It may surprise some people to know that Scratcher games have become the Lottery’s best-selling product, rather than the headline-grabbing jackpot games like Mega Millions. Fiscal year 2005 was no exception. With popular games like World Series of Poker, $100,000 Texas Hold ‘Em, and Money Maker Double Play leading the way, sales of Scratchers reached almost $680 million.
This is not to say that the multi-state Mega Millions game did not perform well. Fueled by large and exciting jackpots, Mega Millions sales exceeded $137 million in FY 2005, which is a new record. The Lottery’s other jackpot game, Lotto South, generated excitement of its own with seven jackpot winners in Virginia during the year. If you won a Lottery prize, would you let it go unclaimed? Although few people would say “yes” to that question, more than $9.3 million in prizes went unclaimed in FY 2005. All of this money goes to Virginia’s Literary Fund, which is used solely for educational purposes, such as school construction, renovation, and teacher retirement funding. The Lottery also collected more than $900,000 under the Commonwealth’s debt setoff program, in which prize payments are withheld to pay certain obligations that the prize winner owes, such as taxes or child support. “The Virginia Lottery is proud of its reputation for integrity, innovation and fun,” said VanCleave. “And the benefit to the Commonwealth is clear: more than $423 million for Virginia’s K-12 public schools. Helping to fund schools is the reason the Lottery exists.” SOURCE: Virginia Lottery media
release. WEST GREENWICH, Rhode Island, USA (August 2, 2005) - GTECH Holdings Corporation (NYSE:GTK) today announced that LOXLEY GTECH Technology Co. Ltd. (LGT), a joint venture in which GTECH is a 49 percent equity owner, has signed a five-year agreement to provide equipment and services for a national online lottery in Thailand. Loxley Public Company Limited, a leading trading and telecommunications conglomerate in Thailand, holds a 51 percent equity stake in LGT. GTECH is the major technology and service provider to LGT. “This is another significant achievement for GTECH,” said GTECH President and CEO W. Bruce Turner. “We look forward to assisting in the implementation of Thailand’s first-ever online lottery. Our partnership with LGT will provide leading-edge technology and best-practice project management principles to deliver a world-class lottery solution and services to the Government of Thailand.” Under the terms of the agreement, GTECH will supply a turnkey system, consisting of GTECH’s Enterprise Series™ solution and approximately 12,000 Altura® terminals, to LGT, who will, in turn, supply equipment and integrated services to the Government Lottery Office (GLO) of Thailand. Enterprise Series will provide the GLO with multiple layers of security, including system controls and procedures, and auditing and accountability for all transactions. The lottery may also expand to up to 15,000 Altura terminals over the term of the agreement.
Additionally, GTECH will provide software management and licensing rights to LGT for the five-year term. The GLO expects commercial operation of the online system to commence at the end of February 2006. “This win opens up even more potential opportunities for GTECH in the Asia-Pacific region where our advanced technology offers break-through possibilities to many new and expanding gaming markets,” continued Mr. Turner. With respect to its agreement with LGT, GTECH expects to generate approximately $35 million in product sale revenue. GTECH also expects to receive approximately $17 million in service revenue for ongoing central system software support and licensing over the five years. GTECH is a leading gaming technology and services company. With more than $1.25 billion in annual revenues and 5,300 people in over 50 countries, GTECH provides integrated technology, creative content, and business services to effectively manage and grow today’s evolving gaming markets. In targeted emerging economies, GTECH also leverages its operational presence and infrastructure to supply commercial transaction processing services. For more information about the Company, please visit GTECH’s website at http://www.gtech.com. SOURCE: GTECH Corporation media
release. NEW YORK, AUGUST 4, 2005 -- Scientific Games Corporation (NASDAQ: SGMS) announced that it has been awarded a four-year extension from the Kentucky Lottery Corporation worth $20 million. The agreement commences October 1, 2005 and includes a provision to convert to a Cooperative Services model wherein Scientific Games is paid on a percent of sales basis. Previously the Company was compensated on a flat fee per unit schedule. In fiscal 2005, the Kentucky Lottery generated $707.3 million of which 54% was from instant tickets. These results represent the fifth consecutive year of instant ticket sales growth for the Kentucky Lottery.
"We are very happy to be awarded long term extensions like this," said Lorne Weil, chairman and CEO of Scientific Games Corporation. "Having such a validation of the quality of our services is gratifying and we are looking forward to doing even better going forward." Arch Gleason, president and CEO of the Kentucky Lottery Corp., said, "We have been very satisfied with Scientific Games' work for us. The program has been enormously successful and we expect more of the same over the next four years." About Scientific Games SOURCE: Scientific Games Press Release
SACRAMENTO, August 4, 2005 – With more prizes and more winners than ever before, the California State Lottery broke a 20-year record by posting $3.33 billion in sales for fiscal year 2004-2005. Additionally, the California State Lottery will transfer $1.17 billion to California’s public education, making this the fifth consecutive year to transfer more than $1 billion. The highly popular Scratchers® games brought in more than half of all ticket sales revenue at more than $1.73 billion, an increase of $400,000,000! SuperLOTTO Plus and MEGA Millions generated $1.11 billion, while Fantasy 5, Daily 3, Hot Spot and Daily Derby brought in $487 million. The new MEGA Millions game, introduced during the last two weeks of the fiscal year, was a hit with players and broke the first day ticket sales record by bringing in $2.4 million. “The California State Lottery awarded more prizes, more often and players responded in droves,” said Chon Gutierrez, Acting Director of the California State Lottery. “We shattered sales records and had the best year ever in the California State Lottery’s 20-year history. By implementing some of the industry’s best practices, the Lottery team was able to offer our players more chances to win and more reasons to play.” With an unprecedented $1.79 billion in prizes paid out, more Lottery players felt the excitement and shared in the winning experience. Twenty-eight players in California became millionaires, earning $516,000,000 from SuperLOTTO Plus jackpots and “The Big Spin” show. The Lottery also awarded a SuperLOTTO Plus jackpot of $100 million shared by four winners!
The Lottery released several exciting Scratchers tickets. The very popular $3 Scratchers tickets – newly released Crossword and the player’s favorite Bingo continued to be crowd pleasers and contributed to the best sales year ever. On May 19, 2005 the Lottery was the first in the nation to release collectible Star Wars Scratchers, in conjunction with the arrival of the most anticipated theatrical release in history, Star Wars: Episode III Revenge of the Sith. The $5 tickets continued to be highly requested by our players. “We love to see the insanely long lines for Scratchers and lotto tickets. The Lottery’s done a fantastic job of coming out with new games that get my customers’ attention and bring them into my store,” said Frank Kumamoto, owner of Bluebird Liquor in Hawthorne. “The Lottery’s $5 ticket is clearly the most popular with our players because it offers more prizes. We just can’t keep it in stock!” The sales force behind this record-breaking year was the more than 18,000 hard working retailers throughout California. “Our customers love to play Scratchers and go absolutely crazy when the Super LOTTO Plus and MEGA Millions jackpots reach new heights. The Lottery continues to add more fun and excitement to the games and that gives my customers another reason to come in again and again,” said Michelle Czekaia, Store Manager for Gold Ranch Lottery in Floriston. SOURCE: California Lottery
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