The Oregon Lottery forecasts it will pay its sports betting contractor, SBTech, about $26.8 million over the next three years.
Sports betting, scheduled to begin in September, is expected to attract $332.8 million in the first year and, as it grows more popular, $722.3 million by the third year. SBTech’s payments will correspondingly increase from $5.2 million in the first year, $9.1 million in the second and $12.5 million in the third.
Matt Shelby, the lottery’s spokesman, said that the estimated payments to SBTech represent a percentage of Oregon’s gaming revenue. Taxpayers are not footing the bill.
“The percentage stays the same whether we beat projections or not,” said Shelby, clarifying that SBTech will in turn pay some of the predicted $26.8 million to subcontractors. “But it is fair to say that a majority of it would stay with the company.”
Lottery officials released the internal projections in hopes of quelling concerns about SBTech, which is providing Oregon with turn-key sports betting technology and a mobile app. The company, based in the Isle of Man and Malta, is an experienced player in international sports betting circles. But it’s a relative newcomer to the United States.
With the agreement, the Oregon Lottery will get immediate access to SBTech’s mobile betting technology. Traditional sports gaming kiosks will be in place by 2020 at select lottery retailers, restaurants and bars, according to state documents released Monday.
Another company that lost the bid to manage Oregon’s sports gaming business, has protested the lottery’s choice of SBTech. Scientific Gaming met with lottery officials and reportedly presented evidence that SBTech operated sports betting in countries where gambling is illegal – or contracted with companies that did.
Scientific Gaming argued SBTech should be disqualified from the Oregon contract because of those allegedly illegal operations.
SBTech has repeatedly denied those allegations. Lottery officials sided with SBTech and insisted that they’ve done adequate due dililgence, including a background check by the Oregon State Police. Lottery officials also point out that three other states -- New Jersey, Mississippi and Pennsylvania – have approved SBTech to operate in those states. .
But that’s not entirely accurate. New Jersey has granted SBTech a “transactional waiver,” said Lou Rogacki, deputy director of the New Jersey Gaming Enforcement Division. A transactional waiver is a temporary approval the state grants to gaming companies that have not been examined by state investigators.
Oregon Lottery officials have refused to release copies of the SBTech contract without first allowing the company to redact any information it wanted. The company blacked out entire sections of the contract, including any reference to exactly how many dollars will be spent on the contract.
Lottery officials also refused to release the results of the Oregon State Police investigation of the company, even though the review reportedly finds no issues with SBTech. However, it’s unclear how influential the Oregon State Police report was: The Oregon Lottery Commission recommended the lottery hire SBTech on March 29, yet state detectives didn’t arrive in Bulgaria to conduct the investigation until April 10.