Montana Lottery’s Intralot Deal Faces Scrutiny Over Withheld Emails

By jili tutorial · September 25, 2026

The Intralot-Montana Lottery Standoff: A Deep Dive into Procurement Regulation and the Limits of Government Transparency

Introduction: The Battle Over the Emails

A routine legislative audit of the Montana Lottery has escalated into a major political confrontation, testing the limits of government transparency and the effectiveness of state procurement regulations. At the heart of the dispute is a set of emails that Montana Lottery Director Bob Brown has refused to hand over to state auditors, claiming they are protected by attorney-client privilege. This refusal has provoked sharp criticism from lawmakers who view it as an obstruction of a legitimate oversight function.

The controversy surrounds a lucrative seven-year contract with Intralot, a Greek-based gambling technology provider that operates popular games like Montana Millionaire and Montana Sports Bet. While no one has been formally accused of corruption, the sequence of events surrounding the contract award and the subsequent audit has raised serious questions about how the state manages its relationships with major vendors and whether the regulatory framework designed to ensure fairness is functioning properly.

Background: The Contract and the ‘Sweetheart Deal’ Accusation

The Unsolicited Proposal that Started It All

Intralot had been operating under a previous contract that gave it 8% of sales on the games it ran. When it made an unsolicited proposal to extend this relationship, it initially offered no reduction in this rate. This immediately raised red flags. In the world of government contracting, an unsolicited proposal is already an exception to the standard rule of competitive bidding, requiring extra scrutiny. An offer that comes with no financial improvement for the state naturally invites skepticism.

Lawmakers Intervene

The Montana Lottery Commission, a citizen oversight body, voted unanimously in September 2024 to put the contract out for a competitive bidding process. Director Brown, however, ignored this directive and paused the bid process to explore Intralot’s unsolicited offer. This action prompted Commission members to openly question whether a “sweetheart deal” was being arranged for the incumbent supplier. The executive decision of the Director directly contradicted the regulatory body’s vote, creating a tension between the agency’s staff and its oversight commission.

The Cost of Bypassing Competition

Lawmakers threatened to withhold the Lottery’s funding until a competitive process was completed. Intralot ultimately won the bidding process, but at a starkly different rate. Instead of 8%, the contract was secured at 5.05%, a reduction that state auditors estimate will save Montana approximately $17.6 million over the life of the seven-year deal.

This dramatic cost saving highlights the core regulatory lesson: competitive bidding is a powerful check on vendor pricing. Had Director Brown been allowed to pursue the unsolicited deal, the state would have lost the leverage necessary to secure a much better financial outcome for its taxpayers.

The Audit Standoff: Privilege vs. Transparency

What the Auditors Wanted

The Legislative Audit Division’s review sought to determine if conflicts of interest had influenced the procurement process. A central part of this investigation was accessing Director Brown’s emails to trace communications concerning the Intralot deal. Auditors needed to see who initiated contact, how the terms were discussed, and what the true nature of the relationship was between the Lottery and the vendor.

The Blockade

Brown provided access to most of his emails but withheld a specific set, citing confidentiality designations and attorney-client privilege. The Department of Administration and Governor Greg Gianforte’s office were also cited in the audit for restricting access to information.

During a subsequent hearing of the Legislative Audit Committee, Sen. Tom McGillvray (R-Billings) accused the Lottery of “obstructing” the audit. The core question for the committee was whether the executive branch could legally withhold documents from the legislature’s independent watchdog. While attorney-client privilege is a legitimate legal argument, its invocation in a public procurement audit naturally raises the suspicion that it is shielding procedural violations or embarrassing communications rather than legitimate legal strategy. The standoff prevents the auditors from fulfilling their mandate to issue a clean bill of health for the process.

The Defense

Brown defended his decision before lawmakers, stating that he explored the offer because he believed doing so was in the best interests of Montana. He framed the withheld communications as routine legal safeguards, not an attempt to hide illicit activity.

Unanswered Questions and Gaps in Oversight

The Origin of the Proposal

The audit also revealed a surprising failure of institutional memory. Auditors could not establish how Intralot’s unsolicited proposal originally came to be. Lottery officials told investigators they could not recall the specific details of how this critical offer was received outside the standard competitive process. In a properly regulated environment, such a milestone should be heavily documented with dates, times, and meeting notes. The inability to produce basic records points to a significant breakdown in internal controls within the agency.

The Vendor’s Silence

Intralot itself has not appeared at any public hearings to address the controversy. Neither company representatives nor its registered Montana lobbyists have participated in the legislative discussions, leaving lawmakers without the ability to question the vendor directly. This silence, while a common legal tactic to avoid putting a company on the record, does significant damage to the public’s ability to gauge the fairness of the deal. It leaves the origin of the proposal and the nature of pre-contract discussions completely unanswered.

Regulatory Implications and Necessary Reforms

This case offers a stark illustration of the friction points within public procurement regulation. For states and agencies looking to avoid similar crises, several lessons emerge:

The Unsolicited Proposal Trap: Unsolicited proposals should immediately trigger a public record and a formal market check. The Montana Lottery’s experience proves that accepting a proposal from an incumbent without testing the market can cost the state millions. Strict statutes requiring a formal pause, a publicly docketed notice, and a competitive solicitation upon receipt of any unsolicited offer should be considered.
The Limits of Audit Authority: The battle over the emails is a classic separation-of-powers conflict. Effective regulation depends on the ability of legislative auditors to see executive communications. If “attorney-client privilege” can be used to blanket an entire procurement negotiation history from legislative view, the regulatory framework is fundamentally broken. States must have clear laws establishing the supremacy of legislative audit over executive privilege in matters of public spending.
Mandatory Vendor Testimony: The refusal of Intralot to attend hearings suggests a loophole in the contracting process. Future state contracts could include a compliance clause requiring vendor participation in post-award oversight hearings as a condition of payment. This would prevent vendors from taking the money and hiding from the questions.

Conclusion: The Cost of a Closed Door

The outcome of this standoff will set a precedent for how Montana and other states balance the need for confidentiality in contract negotiations with the public’s right to transparent governance. The attempt to bypass competitive bidding, the memory lapses at the agency, the withheld emails, and the vendor’s silence create a perfect storm of distrust that undermines the entire Lottery system.

While no charges of corruption have been filed, the regulator’s job is to prove integrity, not just assume it. The impasse over the emails prevents that proof from being established, leaving a cloud over the state’s single largest gambling contract. For the public and for lawmakers, the lesson is clear: a transparent procurement process is not just a bureaucratic formality; it is the only reliable guarantor of fair value and honest dealing in government.