Company Fined $208,500 for Crash of Lotto Computer

SAN FRANCISCO — The California Lottery will fine GTECH Corp. $208,500 for a weekend computer crash that left two thirds of the Lotto 6/49 terminals in Southern California unable to accept wagers, lottery officials said Wednesday.

The fine is the largest single penalty assessed against GTECH for a computer problem since it won the contract to operate the state’s legalized numbers games in October, 1986.

Lottery spokesman John Schade said that all 4,375 terminals in Southern California stopped working for 14 minutes in the peak betting period Saturday night, when the main lotto computer in Whittier crashed because of an error in a new program.

Two-thirds of the terminals in retail outlets remained unable to accept wagers on the $6-million jackpot for the rest of the night because a GTECH operator installed the wrong back-up program, preventing individual terminals from signing on to the system, Schade said.

Schade said the flawed program, installed last week and designed to improve the computer system’s reliability, has been removed for testing, and an older but functioning program has been installed.

The state’s contract with GTECH allows it to charge the company $4,000 for each minute that the system is not working, and $1,000 a minute when it is unacceptably slow.

Sales for the Saturday drawing were as much as $700,000 below sales for the previous Saturday, when the jackpot was roughly similar.

GTECH may contest the proposed $208,500 fine, but Pete Morrissey, vice president for the company’s Western operations, acknowledged in an interview earlier this week that GTECH was responsible for the problems.

Meanwhile, the state controller’s office and lottery officials said there is no basis to claims that California has been cheated by GTECH.

During an exhaustive probe by three experts into collection of penalties for “down time” of Lotto terminals at retail outlets statewide, auditors “looked at every single allegation” and interviewed scores of employees, said lottery security chief Lew Ritter. Out of 105 cases, auditors found $3,790 in penalties that should have been imposed, he said.

“It took us $7,972 in (staff) time to prove that we should assess those liquidated damages” in cases that he said were scheduled to be investigated anyway.