Montana Lottery director says agency is negotiating with incumbent vendor as commission and lawmakers press for RFP

At a Wednesday meeting of the Section 8 Appropriations Subcommittee, Director Brown said the Montana Lottery is negotiating with its current vendor and has not yet released a full request for proposals (RFP) for the statewide lottery contract, which the director said expires in March 2026.

The issue matters because the contract covers statewide lottery terminals, software and related services; Director Brown told the committee the vendor currently receives about "8 cents on the dollar" and the agency had been anticipating that fee could rise to about "12 cents" — an increase he described as roughly a "23-plus percent" change. "We are exploring those options, currently with our... the current vendor," Brown said, adding that negotiations are confidential and that any final contract would be voted on by the Lottery Commission.

The committee pressed Brown on timing and oversight. Senator Mandeville and other members pointed to a September Lottery Commission vote directing staff to prepare an RFP; John Metropoulos, a former lottery commissioner who addressed the committee during public comment, said the commission "took a vote" in September and expected the RFP to move forward promptly. "It was delayed for some reason, unexplained to us," Metropoulos said, and urged the Legislature to pass language (he cited Senate Bill 232 in his remarks) to restore a clear RFP requirement.

Committee members asked whether statutory language in Senate Bill 51 from last session permits the Lottery to avoid a public RFP. Director Brown said the bill changed the statutory wording from "consultant" to "person," and that legal counsel at the Department of Administration (DOA) advised the agency that the change could allow negotiating outside the standard RFP process. Senator Harvey said she and other legislators did not understand the statute to permit an exemption and asked for DOA and the governor's office to explain how that interpretation arose.

Brown described the practical considerations he says motivated the negotiations: he said replacing a vendor can be time-consuming and operationally disruptive because new terminal equipment and software must be deployed statewide and would require substantial coordination with sales agents and retail locations. "If we were to switch vendors, they need approximately a year to change out, that would be a change out of every piece of equipment in the state," Brown told the committee. He also said the current contract allows extensions and that the agency could extend as needed to manage a transition.

John Metropoulos, who identified himself as a Helena lawyer and a former governor-appointed lottery commissioner whose term ended Jan. 1, 2025, urged the committee to require an RFP. "You can't compare bids or proposals without going through the RFP," Metropoulos said. He described the contract as "tens, if not hundreds of millions of dollars" and said rapid changes in technology make a transparent, competitive process important.

Committee members also raised governance questions: Brown said the Lottery Commission has final authority over contract decisions, and he described the commission as a co-directive body. Several legislators noted that multiple commission terms were expiring and that appointments were pending in the governor's office; they asked Brown to confirm whether a functioning commission will be in place to review any contract recommendation.

Lawmakers signaled they may use budget language to require an RFP. Representative Muscovich and others said they want explicit legislative direction if the committee concludes the agency has not followed the commission's September directive. Brown said the agency would comply with legislative changes and that he expected a decision on whether to accept a negotiated offer or pursue an RFP "within a couple of weeks," subject to legal review.

No formal committee action or vote occurred during the hearing. The committee indicated it would follow up with DOA, the governor's office and the Lottery Commission to clarify statutory interpretation, commission membership status and whether confidential negotiations would be presented to commissioners for their approval.

Ending: Lawmakers left the hearing with unresolved questions about procurement law, commission oversight and timing. Several members said they expect further briefings and may include RFP-directed language in the upcoming budget process to ensure a public, competitive procurement takes place if the commission or legislature determines that is required.