Zero hour at hand for AWI, lottery New operator takes over tomorrow after delaying start; Track record questionable; Legislators, officials, states are watching after Arizona fiasco


Maryland finds out tomorrow whether an upstart company with a troubled past is ready to operate the state's $1 billion-a-year lottery business.

Before dawn in Baltimore's Pigtown, Automated Wagering International Inc. will activate a computer system that should begin running almost 3,800 new sales terminals and several hundred keno screens at lottery outlets across Maryland.

It is the first time AWI, a lottery computer contractor, has set up shop in a state since its ill-fated foray into Arizona last year.

The Arizona Lottery fired the Atlanta-based company in May for poor performance. Temperamental computers broke down and sometimes refused to read play slips and tickets. Software glitches created billing problems and, on one occasion, temporarily paralyzed the entire system.

In Maryland, the company angered state legislators and unnerved businesses when it postponed its scheduled July 22 takeover until tomorrow because of software flaws.

"I'm uneasy," said Del. Sheila E. Hixson, chairwoman of the House of Delegates committee that oversees lottery issues. "I can't put a finger on it. It's just that the track record has been questionable."

At 9 o'clock tonight, the current lottery contractor, GTECH Corp. of Rhode Island, will shut down its computer system. At 5: 30 a.m. tomorrow, AWI must have its system up and ready to sell.

Much is at stake, for Maryland and AWI.

Maryland draws more than $1 million a day in revenue from the lottery. That money is especially vital now because the state is counting on some of it to pay for the new National Football League stadium in Baltimore.

"We balance the state budget on the lottery," said Hixson, a Montgomery County Democrat. "We've become dependent on it, question."

For AWI, tomorrow offers a chance to prove that Arizona was a fluke. "It's not lost on my company, after Arizona, what's at stake here," AWI President Mark L. Cushing has said.

It's not lost on other state lotteries and related businesses, either. "I can guarantee you that everyone in this business is acutely aware of, and interested in, what's going on in Maryland," said Bruce La Fleur, co-publisher of La Fleur's Lottery World magazine.

AWI presents the only major competition to GTECH, the U.S. lottery industry leader. AWI provides computer services to six other state lotteries, while its rival supplies 28 states.

Maryland selected AWI after it promised to supply and maintain lottery computers and games for about $53 million over five years -- roughly half the price offered by GTECH.

Given the complexity of the task tomorrow, the state lottery agency expects some glitches but nothing major, said spokesman Carroll H. Hynson Jr. "For the most part, we're very optimistic about things starting up as planned," he said.

AWI has spent months preparing as workers developed software and installed and tested computer terminals at stores, restaurants and bars.

The company also taught more than 7,000 employees from those establishments how to operate the terminal, a dark-pink, boxy machine that spits out tickets.

"They're very easy to use," said Violet Kemble, a bartender at Happy Days restaurant in Anne Arundel County. "I like them a lot better than I do the old one."

The lottery agency and contractor also have been working to correct problems, most reportedly minor, that occurred during extensive testing of the AWI computer system. The state spent $233,000 to have an independent consultant conduct the tests.

Lottery officials and the consultant say the number of problems is not unusual.

Still, some legislators, stores and even the Kentucky Lottery are anxiously awaiting tomorrow's "conversion" to the AWI system.

Kentucky Treasurer John Kennedy Hamilton said he doesn't envy Maryland. "You guys are on the chopping block. You are either the next success story for competition in the lottery industry, or the next Arizona."

Kentucky, lured by AWI's low price, selected the company to run its games last year but held off finalizing the deal. Officially, the state is waiting to resolve undisclosed issues. But Hamilton, lottery board member, said he also wants to see how the contractor fares in Maryland.

The Kentucky Lottery plans to have officials in Baltimore tomorrow to see how AWI performs.

Last year AWI began a price war with GTECH, winning the contracts in Arizona, Maryland and Kentucky by promising to do the job for less.

In Maryland, AWI's price was so low it raised eyebrows. An AWI official later explained his company wanted to win Maryland so it could run its first keno game.

The offer was too good to pass up. To avoid the procurement scandals that have tainted some state lotteries, Maryland set up a system that made it difficult for it to pick anyone other than the low bidder.

Lottery officials looked like heroes last fall, but now, in the wake of the Arizona firing and delay in starting, they are feeling the heat.

In June, when AWI asked for more time to get ready, it blamed GTECH, saying its rival was late in handing over computer information. GTECH denied the charge.

Because of the delay, Maryland is spending about $1 million to keep GTECH on hand until Aug. 31. The state would like AWI to pay those costs, but AWI is claiming it may be entitled to compensation because of certain alleged failures to act by the lottery agency, according to a legislative auditor's report.

"They are saying other people caused their failure to perform," said Assistant Attorney General Andrea Johnson. Such allegations are typical, she said. "Whenever you have a contractor-state relationship and anytime you have money on the table, that's going to happen."

Some lottery observers say they hope, for the sake of AWI and the industry, that the company succeeds in Maryland.

"The lottery industry needs a number of competitive companies to ensure good prices, new technology and good service," said Michael Jones, a former Illinois state lottery director who runs a marketing firm specializing in gaming.

"It's extremely unfortunate if a company starts winning bids and has problems with implementation that cause people to start questioning the company. That's not healthy for the company or the lottery business," he said.

Pub Date: 8/18/96

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