But for GTECH and Scientific Games, the nation's two leading lottery vendors, the Garden State's lottery is a jackpot worth $107 million over the next five years.

Or maybe $75 million.

That $32 million difference is at the heart of a formal protest filed in November by Scientific Games, which contends that the state erred in accepting GTECH's higher bid. Both companies are awaiting word from John Naiman, director of the state Division of Purchase and Property, who has been reviewing the protest and requesting additional information for several months.

But no matter how Naiman ultimately rules, lawsuits and finger-pointing are almost sure to follow.

That's how things work in the U.S. lottery business and in New Jersey's own tumultuous history of lottery contracts. "It's a litigious business, so what's happening in New Jersey is par for the course," said Joan Zielinski, a professor of marketing at Northwestern University's Kellogg School of Management who was New Jersey Lottery director from 1985 to 1987. "You have multimillion-dollar contracts, and the vendors who participate basically are qualified, so when someone loses a bid, they will pull all the stops out to regain a foot up on the competition."

Getting that foot up has sometimes involved stretching ethical and legal boundaries.

Ever since New Hampshire ushered in the modern era of state lotteries in 1964, big bucks and buyable bureaucrats have combined to create a series of corruption scandals.

From West Virginia to Florida to Texas to Oregon, bribery, fraud and promises of high-paying future employment for cooperative state employees have led to countless resignations of lottery personnel -- and sometimes, to criminal investigations.

The cutthroat efforts of rival lottery firms to gain favor with key state officials -- a battle in which GTECH has participated for decades -- was colorfully summed up by the former president of Automated Wagering International in a 1996 Fortune magazine article.

"We'd go to dinner with the lottery director, and find out GTECH had hired a yacht and taken out the whole [expletive] legislature," W. Hubert Plummer said. "It was like shooting your popgun, and they were firing a howitzer."

A history of problems

But a decade ago, prosecutors fired back in New Jersey.

Former GTECH executive J. David Smith was convicted in Newark federal court in 1996 on 20 counts of fraud, conspiracy, money laundering and bribery. Smith was caught running a scheme in which he received kickbacks totaling $169,500 from an owner of a politically connected South Jersey consulting firm that was being paid $30,000 a month by GTECH. During the trial, GTECH acknowledged it spent more than $10 million a year in lobbying costs nationwide to protect its turf and expand its business.

Hazel Gluck, who was the director of the New Jersey Lottery in 1984, when GTECH first won the state contract, testified during Smith's trial to receiving $3,500 a month as a GTECH consultant in 1992 and 1993. Gluck later became co-chairwoman of former Gov. Christie Whitman's transition committee before Whitman took office in January 1994.

Smith hasn't been the only GTECH official to run afoul of the law.

Company founder Guy Snowden resigned as chairman in 1998 after a British court found him guilty of libel. Snowden had publicly denied accusations by Virgin Airlines chief executive Richard Branson that Snowden had tried to bribe Branson into stepping aside from the bidding to run the lottery there.

In 2000, GTECH Chief Executive Officer William O'Connor and Chief Operating Officer Steven Nowick resigned over charges that they had failed to inform British lottery officials that faulty software had led to inaccurate payouts -- most of them underpayments -- to more than 100,000 players over several years.

GTECH officials described Smith in 1996 as a "rogue employee," and they have said the company's board of directors was unaware of the British computer glitches. Still, GTECH's questionable practices once led New York state Sen. Frank Padavan of Queens to call it "a sleazy firm in a sleazy business."

Spreading cash around

As Padavan's comment suggests, GTECH -- with roughly 70 percent of the U.S. lottery business -- hardly is alone.

Scientific Games -- which is crying foul in New Jersey over the selection of GTECH -- acknowledged last year that it had paid $24,500 for public relations work to a then-active member of the North Carolina Lottery Commission.

The company also paid $4,600 in expenses last year to a former top political aide to North Carolina House Speaker Jim Black. Both declined to acknowledge benefiting from Scientific Games' largesse until recently, and both have since stepped down. But an FBI investigation continues.

GTECH was chosen as North Carolina's lottery vendor two weeks ago.

Scientific Games alleges no criminal misdeeds in its 90-page protest of the New Jersey decision. But the company takes exception to several elements of the selection process.

The crux of its complaint is that its bid of $75 million for a five-year contract is substantially lower than the $106.7 million bid by GTECH.

But the losing bidder also is protesting that the state allowed GTECH -- the current operator of New Jersey's lottery -- to slash its initial bid of $142.5 million via a "best and final offer process" that Scientific Games contends is illegal.

Officials at the Division of Purchase and Property contend that it would be too risky to turn over the management of the lucrative business -- the state keeps about one-third of the $2 billion in annual revenues -- to Scientific Games. GTECH received a much higher technical score from an evaluation committee, based on visits to each company last fall and a review of their respective experience in the business.

"The committee firmly believes that the difference in cost between the two proposals is far outweighed by GTECH's clear technical superiority and by its experience in conversions/implementations of lotteries that are similar in size and scope to New Jersey's," the committee concluded in its Oct. 31 report.

Scientific Games counters that it has successfully completed conversions of formerly GTECH-run lotteries in Colorado and Puerto Rico, and that it has contracts with 17 domestic lotteries overall.

"Scientific Games is a sophisticated, high-quality vendor of lottery products, not a fly-by-night operation as the report makes it out to be," the protest asserts.

The company further contends that because most five-year lottery-vendor deals turn into 10-year commitments, the difference to the state between Scientific Games' bid and GTECH's bid would be at least $63 million over 10 years.

Timetable unclear

If the state agrees to pay GTECH $21 million a year, that will be about one-third lower than the current payout to GTECH. But Scientific Games' bid would cut the annual cost virtually in half.

The timetable for a ruling is unclear. The Treasury Department can request further information, call for a public hearing or simply issue a ruling. Treasury Department spokesman Tom Vincz declined to comment on the protest or on the department's next step. A Scientific Games spokesman said the company would not comment beyond its formal protest to the state, and a GTECH spokeswoman did not return a call seeking comment.

Zielinski said that the structure of the industry produces a Catch-22 -- one that is all too familiar to job-hunting college graduates. States want to hire only companies with extensive experience, which prevents all but a few companies from entering the competition. In New Jersey, for example, only GTECH and Scientific Games submitted bids last year.

"The entry and exit barriers are enormous, so you have a small group of entrenched suppliers," Zielinski said. "With those sorts of small groups, the competition always is intense. With multiple suppliers, the result would be price wars and advertising, like the airline industry.

"It appeared for a short period of time that [the lottery wars] might be abating, but now it seems we're back to Square One."

That's familiar turf for New Jersey, where protests also were filed in 1984 -- when GTECH first won the contract -- and in 1994, when an appellate court reversed a state decision to have Hackensack-based Automated Wagering International take over running the lottery.

A second round of bidding led to GTECH's being chosen. AWI protested, but to no avail. GTECH has run the lottery ever since.