The Oregon Lottery last week signed a contract with SBTech Malta Ltd. to operate the state’s sports betting operation.
The contract is considered controversial because of allegations by the competing bidder that SBTech Malta does business in nations where gambling is illegal.
Barry Pack, director of the Oregon Lottery, said there is no evidence to support this allegation. Nevertheless, the contract when released to the press had large numbers of redactions, such of them entire pages. The redactions also don’t show how much the state will pay its contractor.
The state has also declined to release a background check conducted by the state police. It did release a summary of findings by Darin Goodwiler, assistant director of security for the lottery. He recommended hiring the company.
The state came close to not legalizing the lottery after one lawmaker proposed prohibiting mobile wagering. Then Governor Kate Brown suggested using proceeds from sports betting to pay the state’s large public employee pension obligation. Neither proposal was adopted.
The state projects that it will start with a volume of $330 million in bets the first year and achieve $680 million by year three.
The Lottery has promised to unveil sports betting before the NFL season begins in September. Speed was one reason the Lottery chose SBTech, because it offers a turnkey package, including an app for cell phones.
SBTech, which is based on the Isle of Man in the UK, hasn’t done much business in the U.S., having previously operated in Europe and Asia. Its subsidiary is based on the Island of Malta. That changed last year when it began to operate sports betting for New Jersey, Mississippi and Pennsylvania.
The Lottery’s further eagerness to contract with SBTech was indicated when it announced its selection six weeks before the official due diligence was completed. This prompted the losing bidder, Scientific Gaming to file a protest in which it alleged that SBTech does business with nations where gambling is illegal.
This led to an investigation that included sending a team of detectives to far-flung locations such as Bulgaria and possibly China.
Goodwiler in his report wrote, “During the course of the investigation an allegation was brought to our attention that SBTech was operating in a ‘black market’ specifically China. Despite the allegation that China is a ‘black market,’ it appears to be viewed by others as a ‘gray market,’ though I suggest that the Lottery continue to monitor that status.”
China has very strict anti-gambling laws and only allows it to take place on Macao, where only non-Chinese may participate.
SBTech issued a denial of these allegations: “To be very clear, SBTech does not operate in any black markets. If it did, it would not be licensed in the numerous jurisdictions it is currently licensed in.”
