Maryland Lottery Provides Details of $49 Million Contract

Lottery Officials Give Breakdown of VLT Costs

At its June 9 meeting, the Board of Public Works approved $49 million in spending for 1,062 Video Lottery Terminals (VLTs) to be used at the soon-to-open Hollywood Casino in Cecil County. To ensure transparency of the process and clarify costs, the Maryland Lottery is providing a detailed breakdown of the expenditures, which includes the purchase and leasing costs of the VLTs. Of the total 1,062 machines, 267 will be leased. The average cost per VLT, depending on manufacturer, is approximately $18,000 to $25,000 for the 795 VLTs being purchased. The breakdown also provides costs for five years of maintenance, software updates, game conversion and machine repair.

“The VLT procurement process is complex, as conducted in accordance with State law,” said Maryland Lottery Director Stephen Martino. “We are in a hyper-competitive gaming area and need to be strategic about providing a wide selection of state-of-the-art machines that will attract people to the Maryland VLT facilities – instead of going to casinos in surrounding jurisdictions. We worked closely with the operator of the Hollywood Casino in selecting the correct mix of games to maximize revenue and ensure success.”

Maryland’s gaming law, which was approved by the legislature, requires the State to own and/or lease and maintain all of the VLTs, which eventually will be placed in five privately-owned facilities. According to the Department of Legislative Services, those locations — at full implementation — are expected to generate approximately $600 million each year in revenue for the State. The Maryland Lottery has selected qualified manufacturers to supply the machines to the casinos through a master contract that was approved by the Board of Public Works after extensive discussion in April.

“It is the job of the Maryland Lottery to implement the law as enacted by the General Assembly,” said Lottery Procurement Director, Robert Howells. “This group of VLTs is the first of many — up to 15,000 — to be acquired under this master contract during the next five years.”

Cecil County’s Hollywood Casino is expected to open ahead of schedule, on September 30, 2010, subject to construction and final regulatory approvals. The Ocean Downs location is slated to open by the end of the year. Anne Arundel County’s proposed location, Arundel Mills, is on hold until a judge determines the validity of a referendum. Locations in Western Maryland and Baltimore City will be re-bid.

Following is a detailed list of Hollywood Casino’s projected machine inventory:

Manufacturer – KGM

Buy – $233,718 – 12 machines (Purchased)
$19,476.50 per machine

Maintenance – $59,419.27 – 12 machines
$990.32 per machine per year for 5 years

Manufacturer – BALLY

Win per unit – $5,106,444 – 185 machines (Leased)
$5,520.48* per machine per year for 5 years

Fixed daily rate – $6,931,144.42 – 46 machines (Leased)
$30,135.41 per machine per year for 5 years

Manufacturer – ARISTOCRAT

Buy – $2,848,456 – 158 machines (Purchased)
$18,028.20 per machine

Maintenance – $1,660,925.01 – 158 machines
$2,102.44 per machine per year for 5 years

Win per unit – $1,656,144 – 24 machines (Leased)
$13,801.20* per machine per year for 5 years

Manufacturer – IGT

Buy – $8,221,855 – 329 machines (Purchased)
$24,990.44 per machine

Maintenance – $6,656,829.67 – 329 machines
$4,046.70 per machine per year for 5 years

Fixed daily rate – $3,450,387.01 – 12 machines (Leased) + 59 License Fees**
$9,719.40 per machine per year for 5 years

Manufacturer – SPIELO

Buy – $5,949,792.52 – 290 machines (Purchased)
$20,516.53 per machine

Maintenance – $4,054,111.79 – 290 machines
$2,795.94 per machine per year for 5 years

Manufacturer – SHUFFLEMASTER

Buy – $599,970 – 6 machines*** (Purchased)
$19,999 per position per machine

Maintenance – $100,826.17 – 6 machines
$672.17 per position per machine per year for 5 years

All lease rates include maintenance

* Assumes $210 win per unit per day according to Legislative Services study

** The IGT fixed daily rate includes 12 machines and 59 software licenses to run on machines purchased from the manufacturer.

*** Shuffle Master provides electronic table games that allow five gaming positions per machine for a total of 30 positions.

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