Sports betting contractor sues Oregon Lottery, justice department, The Oregonian/OregonLive to keep contract secret

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A look at the login page for the Oregon Lottery's Scoreboard App, which is the state of Oregon's first and only legal online sports betting option for Oregonians who are 21 and over. Tim Brown | The Oregonian/OregonLive.

A heated battle over public records reached the boiling point last week when a company working for the Oregon State Lottery obtained a temporary restraining order blocking the release of its contract with the state to The Oregonian/OregonLive.

Public agencies routinely make contracts with vendors available to the press and the public because they detail the spending of public money. But SBTech, a Malta-based company which runs the lottery’s new sports betting operation, has fought the dissemination of its contract almost from the day it was hired last spring.

Despite an order from Oregon’s attorney general that the contract must be disclosed, the company filed an extraordinary lawsuit on Jan. 10 against the lottery, its director Barry Pack, the Oregon Department of Justice, and Attorney General Ellen Rosenblum as well as The Oregonian/OregonLive.

Oregon’s largest newsroom and a gaming industry trade publication set off the current legal fight when they both filed public records requests with the lottery asking for the SBTech contract.

The company’s hard-nosed strategy to fight disclosure worked, at least in the short term, when it got the temporary restraining order last week. SBTech will return to the Marion County Circuit Court Wednesday in hopes of convincing Judge David Leith to extend the temporary restraining order into a preliminary injunction.

The company said release of the agreement would reveal “confidential and proprietary trade secrets and pricing systems that belong to SBTech.” Disseminating the document would do “irreparable harm” to the company, it said in court filings.

The Oregonian/OregonLive and gaming industry trade publication Legal Sports Report both filed public records requests for the contract last spring. In response, the agency released a heavily redacted copy that blacked out all information about how much the state lottery was paying SBTech and other costs to the lottery.

Lottery officials said they were bound by the terms of their contract with SBTech, which gave the contractor the right to demand that certain information remain private. Lottery spokesman Matt Shelby said it’s a “weird” feeling for the agency to be sued by one of its most important contractors. But it’s not entirely surprising, he added.

“SBTech is a private company in a really competitive environment,” Shelby said.

The Oregonian/OregonLive and Catena Publishing, parent company of Legal Sports Report, appealed the lottery’s decision to the state Department of Justice. The agency sided with the media outlets and said the lottery must release the document.

At that point, the lottery notified SBTech that it would release the entire contract. But SBTech continued to fight. It filed its wide-ranging lawsuit on Jan. 10. Among the defendants is Pack, the head of the state lottery and one of SBTech’s most ardent supporters.

For reporters, the lottery’s refusal to release details of the SBTech agreement has been mystifying. Eric Ramsey, a long-time gaming industry reporter for Legal Sports Report, said he’s routinely gotten similar information from other states.

“I’ve never seen anything like this,” Ramsey said. “It really set off alarm bells. It should not be this difficult to get an accounting of where these dollars are going.”

SBTech’s extraordinary efforts to keep its state contract under wraps comes just as it tries to close an enormous corporate merger that could result in a huge payday for the owners of the company. The proposed deal, announced on Dec. 22, calls for SBTech to be merged with DraftKings Inc., a Boston company that is also in the gaming industry.

SEC filings indicate that if the merger is successfully concluded, the owners of SBTech would be paid at least $650 million.

It’s unclear whether there is any connection between the merger and SBTech’s public records battle.

Until the proposed merger, SBTech was happy to remain out of the spotlight and a bit of mystery to outsiders. It’s hard even to figure out where the company is headquartered. The company’s own legal filings in Oregon say it is based in Malta. SEC filings indicate SBTech was incorporated in Gibraltar and later was registered with the Isle of Man.

When Oregon State Police investigators conducted their review of the company, they went to Bulgaria, where the company reportedly has much of its operations.

Malta, Gibraltar and the Isle of Man are considered offshore tax havens due to their low tax rates and relaxed regulatory environment.

Critics alleged SBTech should be disqualified from the Oregon contract because it ran sports betting operations in countries that had banned gambling. SBTech denied it. Oregon Lottery went ahead and hired the company. Together they started up Scoreboard, the lottery’s sports betting operation, in October.

Lottery officials said state investigators found nothing that would disqualify SBTech. The Oregonian/OregonLive requested a copy of the Oregon State Police report at the same time it requested the SBTech contract. The lottery has so far refused to provide that document as well.

Jeff Manning

jmanning@oregonian.com

503-294-7606

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