FY 24 Specifications Required to Meet CCS SSPJ Attachment1_v.4.docx

Justification for a Multi-Year Contract The State of Illinois seeks a multi-year sole source contract with Light and Wonder, the vendor who provides the Illinois Gaming Board (“IGB”) with the Central Communication System (“CCS”). The CCS is the monitoring and control system that allows the IGB to effectively regulate the distributed network of 45,000 video gaming terminal (“VGTs”) located in over 8,400 licensed establishments. The CCS is the telecommunications and technical manager of the system and acts as the primary and secondary repository for all information received by terminal operators (“TOs”), manufacturers, and licensed establishments (“LE”). Section 15 of the Video Gaming Act [230 ILCS 40/15] requires video gaming terminals to be connected through a CCS. Without a CCS, video gaming cannot operate, and the IGB’s current contract for a CCS expires on December 31, 2023.

The State does not have the infrastructure capability nor the intricate operational knowledge of the CCS to replicate and construct a similar system internally. Undertaking a project of the CCS’s size and scope would take the State years to develop and implement. There are no other governmental entities globally that have created a CCS for a distributed video gaming system of the size and scope of the Illinois market.

Light and Wonder (f/k/a Scientific Games) won the first contract in 2011 to provide a CCS for Illinois’s distributed video gaming market. Light and Wonder created the current CCS, and it has functioned without fail since the inception of video gaming in September 2012. Because Illinois has the largest distributed video gaming market in the world, Light and Wonder is the only vendor currently capable of providing a CCS in Illinois. While the IGB anticipates other vendors may be able to create a CCS, they would likely need a minimum of 12 months (and likely closer 24 months) to adequately develop, test, and implement a similar CCS system to replace the current CCS system. The IGB is not alone in these estimates; on July 31, 2023, Pennsylvania solicited a similar, albeit smaller, CCS. Pennsylvania’s solicitation contemplates an operational CCS by August 2024.

Any delay would cause significant economic harm to State and local revenue and negatively impact the State of Illinois regulatory mission to ensure and uphold the integrity of video gaming. To further illustrate this point, if the CCS were to be offline for one month the State would lose $74 million in revenue to the State of Illinois and local governments would lose $12.7 million. Accordingly, neither the IGB nor the State can afford a lapse in the CCS. And since Light and Wonder is the only company currently able to meet the IGB’s demand for a system that can monitor the more than 45,000 VGTs across more than 8,400 locations, a sole source contract with Light and Wonder is the IGB’s only option.

Specifically, Light and Wonder monitors and tracks all of the money inserted into each VGT and all of the money that a machine pays out. They also monitor and track all of the wagers placed and credits won/loss on each VGT and at each location. Additionally, Light and Wonder facilitates all software upgrades through its CCS, as well as handles all of the net terminal income payments to licensees and tax payments to the State.

Because of the significant negative potential economic and regulatory impact of any disruption to the CCS the IGB is requesting a sole source contract with Light and Wonder for the earlier of 24 months or until a new CCS is competitively selected and certified.

A sole source contract provide the only option for preserving video gaming while selecting a new vendor through a complex solicitation for a new central communications system. There is no economically or technically feasible alternative for an interim solution. Light and Wonder provided quotes for a two year and three year term; a shorter term is not economically feasible for Light and Wonder and would like waste State resources by requiring yet another contract for these services prior to a competitively selected vendor creates a new CCS. Light and Wonder cannot provide a quote for less than two years because it is not economically feasible to do so. The current CCS relies on equipment that has reached its life expectancy, and with the ever-increasing demand on the CCS with Illinois’s still-growing VGT market, the equipment needs to be upgraded and replaced to maintain the CCS’s functionality. Light and Wonder cannot justify upgrading the equipment for a term less than two years.