DOJ: News Release

Gambling Control Division Ends Settlement Agreement with LGS

HELENA — The Gambling Control Division of the Montana Department of Justice announced Friday that it has terminated its settlement agreement with Lodging and Gaming Systems (LGS) of Reno, Nevada and its subcontractors — the companies under contract to develop the state system to monitor video gambling machines.

Gene Huntington, administrator of the Gambling Control Division, said that LGS has not met the timelines set out in the settlement agreement and has refused to set new timelines.

“Fortunately, this doesn’t mean we’re back to square one,” Huntington said. “After I’ve had the opportunity to discuss this with our testing consultants, attorneys and other state officials, the division will make a recommendation on how we are going to proceed with developing the automated system.”

Huntington also said that the settlement agreement had tied payment to completion of system components. Since no components have been successfully tested, no additional funds have been paid to LGS under that agreement.

In spring 2001, LGS stopped work on the system, insisting on a contract amendment before the work would be completed. The state then sued LGS for failing to deliver the so-called “dialup” system specified in the contract originally signed in September 2000. After a number of delays, in June last year the Gambling Control Division and LGS entered into an agreement under which the system was to be completed and tested by early this year

LGS had been paid $930,000 in 2000 when the original agreement to develop the system was signed. Trial in the state’s suit seeking repayment of the $930,000 and other damages, and LGS counterclaims against the state, has been scheduled for May 2004 in Helena.

The automated accounting and reporting or “dialup” system was originally recommended by a legislative audit in 1994 and authorized by the legislature in 1999.

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