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'Unfit' lottery operator wins lucrative state deal

Company that has repeatedly failed performance targets wins contract to monitor Victoria's poker machine industry.

Company that has repeatedly failed performance targets wins contract to monitor Victoria's poker machine industry.

A LOTTERY company that has repeatedly failed performance targets and was once labelled ''not fit'' by state Gaming Minister Michael O'Brien has won the contract to monitor Victoria's poker machine industry, which generates more than $1 billion in state taxes a year.

The Baillieu government announced yesterday that Intralot Gaming Services had beaten Tatts Group for the 15-year electronic gaming machine monitoring licence.

Starting next August, the Greek-based gaming giant will be responsible for collecting data electronically from Victoria's 27,000 poker machines to ensure venue operators are correctly declaring their profits.

Intralot will receive payments from each venue at a rate yet to be decided by a review panel. The government yesterday declined to provide an estimate of what the deal could be worth.

Intralot is taking over the monitoring role from Tatts and Tabcorp, which are also losing their duopoly over poker machine ownership under a broad restructure of Victoria's gambling industry. Ownership of poker machines will switch to individual venues from next August after a controversial auction of machine licences.

Mr O'Brien yesterday welcomed the decision to award the monitoring contract to Intralot. He said it was based on a recommendation from the state Justice Department after an extensive assessment.

In June 2008, when he was in opposition, Mr O'Brien said Intralot was ''pointing a gun at the heads'' of Victorian lottery agents by demanding they pay more than $10,000 to sell its products after it won the exclusive licence for scratch tickets. Two months later, Mr O'Brien described the introduction of

Intralot's scratchie and lottery games as bungled and said the company was partly to blame.

''[The Brumby government] has given a licence to a company which so far is not fit to implement it, which you will see if you look at the conduct of Intralot, at the failure of its technology and at its failure to get information out,'' Mr O'Brien said at the time.

Within months of launching in Victoria, Intralot was blamed by retailers for losing them 15 per cent of their revenue through faulty technology and instructions that were in Greek.

It has repeatedly fallen short of annual financial targets, with The Age last year revealing Victoria lost $109 million in gambling tax revenue because Intralot delivered just 14 per cent of the sales it committed to deliver in 2009-10.

The company also attracted controversy after it paid former state Labor treasurer Tony Sheehan about $1.1 million to lobby for its gaming licence.

Intralot has blamed Tatts for its poor financial performance, accusing its rival of anti-competitive behaviour by demanding agents install and maintain ''Tatts-dedicated'' areas in prime shop positions.

One industry insider told The Age that Intralot's past performance raised questions about its suitability to oversee such a complex system. ''This could be the myki decision of the gambling industry,'' the source said.

Mr O'Brien said Intralot had extensive experience with monitoring poker machines overseas and that was its core business.

He said Intralot would provide independent monitoring because it did not own poker machines and would not under the terms of the new agreement.

''It's very important for the probity and integrity of the process that we have an efficient and capable monitoring licence,'' he said. ''We believe that we've got that with Intralot.''

Opposition gaming spokesman Martin Pakula said the government must reveal the cost of the tender and explain why Intralot should be trusted with the licence, given past failures.

An Intralot spokesman did not respond before deadline.

This year's state budget showed the importance of pokies to Victoria's bottom line. The government estimated it would collect $1.03 billion in revenue from the industry this financial year.

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