Gtech's Guy Falls
(FORTUNE Magazine) – Guy Snowden, the most powerful man in the lottery business, took an impressive fall in early February. The big question is whether he'll take Gtech Holdings, the company he built, along with him.
Snowden's often sleazy, win-at-all-costs tactics (see "The Numbers Crunchers," Nov. 11, 1996) have helped make Gtech the dominant force in the computerized lottery business. Now Snowden, 52, has been forced out after losing a bitter libel battle over bribery allegations by billionaire Richard Branson. One day after a London jury awarded Branson about $180,000 plus legal costs (more than $1 million), Snowden agreed to resign.
Snowden's departure capped a run of ethical controversies. In Texas, where the lottery provides Gtech with about 15% of its revenues, it was revealed that Gtech had paid a former Texas lieutenant governor $3.2 million for a single year of lobbying work. A government court filing also alleged that the lobbyist had participated in a kickback scheme. (Gtech and the lobbyist denied any wrongdoing.) Gtech bought out the lobbyist's contract--for a stunning $23 million--but the state responded by announcing a plan to rebid all its business. Gtech refused to compete, filing suit instead.
Under new chief William Y. O'Connor--who assumes Snowden's title as chairman--Gtech has been taking steps to clean up its image, such as naming a former FBI official as vice president for compliance. Yet Snowden's departure may do more than anything else to change perceptions. Wall Street seems to think so: After the Branson verdict, Gtech stock hit a 52-week low. After Snowden's departure was announced, it quickly climbed.