A big lottery contractor is cashing in. So is the Ron DeSantis reelection campaign.

IGT Global Solutions has given Florida Gov. Ron DeSantis $75,000 in recent months and gotten millions of dollars in new business from the Florida Lottery.

Photo credit: Eva Rinaldi

This is Seeking Rents, a newsletter and podcast devoted to producing original journalism — and lifting up the journalism of others — that examines the many ways that businesses influence public policy across Florida, written by Jason Garcia. Seeking Rents is free to all. But please consider a voluntary paid subscription, if you can afford one, to help support our work.

One of the largest lottery vendors in the world, IGT Global Solutions Plc has been very good to Florida Gov. Ron DeSantis: Records show the company has given the governor more than $125,000 — including another $25,000 check cut just this past June.

The DeSantis administration has been very good to IGT, too.

The Florida Lottery, which is run by a DeSantis appointee, in July awarded an $18 million contract to IGT to install a new prize payment system. IGT, which is already one of the Florida Lottery’s biggest vendors, was the only bidder for the new deal.  

That’s not all. The Lottery is also renegotiating its main contract with IGT, which would boost the company’s annual commission from that agreement by more than $1 million a year.

And IGT isn’t the only company squeezing more cash for itself out of the Florida Lottery — an agency funded by Florida consumers who now lose $3 billion a year buying tickets that cost as much as $50 a pop.

Earlier this year, for instance, DeSantis signed legislation that pays richer commissions to the gas station and grocery stores that peddle lottery tickets to the public.

Emails obtained through public-records requests show that proposal came from lobbyists representing the Florida Petroleum Marketers Association, a lobbying group for gas stations, and Sunshine Gasoline Distributors, a South Florida company that owns around 400 stations.

Records show that Sunshine and its affiliated companies have, like IGT, donated more than $125,000 to DeSantis. (The governor also appointed the company’s president to the governing board of Florida State University, one of the more coveted political appointments in the state.)

The Florida Lottery says its mission is to raise money for public education in Florida. And it does that: Of the $3 billion in losses the Lottery took from Florida consumers last year, more than $2.2 billion was transferred to a state education fund that pays for things like Bright Futures Scholarships and university construction projects.

But that’s not why the Lottery exists. After all, there are lots of different ways to raise money for education — all of which would be more efficient and ethical than running a state-sanctioned gambling ring.

No, the Lottery exists to shift more of the cost of public education off of middle- and upper-class taxpayers and on to a group of consumers that is disproportionately lower-income, lesser-educated and Black — and, in the process, to make a bunch of money for private contractors who work on the Lottery and who in turn make a bunch of campaign contributions to politicians who control the Lottery.

(If you read nothing else, please read Appendix E of this report, which was written by…*checks notes*…. the Florida Legislature’s own auditors.)

How it started

Here's a bit of history about the Florida Lottery:

It was established in 1986, following a constitutional amendment campaign that was led by Florida’s commissioner of education, who promoted the Lottery to voters as a way to raise money for the state’s badly underfunded system of public education.

The lottery campaign kicked off in early 1985. That was just a few months after executives and lobbyists for some of the biggest corporations in the world — companies like IBM, Coca-Cola and Citigroup — persuaded then-Gov. Bob Graham and the Florida Legislature to abandon a different plan to raise money for public schools. That plan would have raised the money by closing tax loopholes that allow companies to hide profits in tax havens. (Those corporate loopholes remain open to this day.)

Lottery supporters ultimately raised more than $550,000 for their amendment campaign. Most of that money came from companies planning to profit off it.

According to a September 1986 story in the Orlando Sentinel, five-figure donors to the lottery campaign included the owners of 7-Eleven and Circle K convenience stores — chains that today earn more than $30 million a year in ticket commissions, according to Lottery data.

Another five-figure donor, according to the Sentinel, was Scientific Games — a company that made more than $55 million last year as the Florida Lottery’s supplier of scratch-off tickets.

The biggest donor of all? The company known today as IGT Global Solutions, which contributed more than $130,000 to the original lottery campaign — and which earned more than $67 million last year to supply the Lottery with retail terminals, vending machines and other equipment.  

And IGT is poised to make even more money off the operation in the years ahead.

How it’s going

IGT and the Florida Lottery signed their latest contract together in late July. The pact will pay IGT an estimated $18.1 million over five years to provide the Lottery with a new prize payment system.

In budget documents requesting money for the project, Lottery officials said they need to replace their current prize system, which is now more than a decade old and had to be developed internally because there wasn’t an “off the shelf” product available at the time on the private market. The age and customization of the current system makes it difficult to find staff or consultants with the necessary programming skills to work on it, they said.

(Lottery officials also said in those same documents that prize payment systems are now “widely available and offered by a variety of vendors” — and yet IGT was the only company that responded to Lottery’s invitation to negotiate.)

The project got a big boost in December from DeSantis, when the governor included funding for it in the budget he recommended to the Florida Legislature. Three weeks later, records show, IGT donated $50,000 to DeSantis’ political committee.

The Legislature agreed to fund the contract during the 2022 session, and DeSantis signed the final state budget in June. Three weeks later, IGT gave the governor another $25,000.  

It’s not the only big payday in the works for IGT.

IGT already holds one of the Lottery’s marquee contracts: a 13-year deal under which the company supplies the network of ticket terminals and vending machines that retailers use to sell tickets.

That deal pays IGT a fraction of every ticket sale as a commission. It’s a tiny faction: Just 0.7385 percent. But it adds up to an enormous amount: $62.7 million last year alone.

Under the current deal, the Lottery is leasing 2,500 vending machines from IGT. But the two sides are now negotiating a revised deal in which the Lottery would lease another 500 machines from IGT — in exchange for bumping IGT’s commission up to 0.7532 percent.

That’s expected to boost IGT’s annual commission by more than $1 million a year — and more than $14 million over the remaining life of the deal. (The Florida Legislature must still sign off on the change, although that’s likely a mere formality.)

Keri Nucatola, a spokesperson for the Lottery, said the goal is to sell more tickets and thus generate more money for a state trust fund that helps pay for public education. (The formal name is the “Educational Enhancement Trust Fund.”)

“As with all aspects of our business operations, the Lottery’s sole goal of possibly leasing 500 additional full-service vending machines...is to increase sales and, in turn, increase our contributions to the EETF,” Nucatola said.  

And for what it’s worth, these additional vending machines will probably do that.

State economists who recently studied this request projected that installing 500 more vending machines around the state would boost Lottery ticket sales by more than $10 million a year. That’s more than enough to offset the higher commission payments to IGT.

Ultimately, they projected that the deal would raise an extra $3 million a year or so for education funding.

Of course, you could also raise that same amount of money — a bit more, actually — just by taking away a tax break that DeSantis and the Legislature gave to Disney a few years ago.