BMM Testlabs may yet find out whether it will crack tough Illinois market

BMM Testlabs may yet find out whether it will crack tough Illinois market

  • John L. Smith
September 13, 2018 12:00 AM

These should be the best of times for BMM Testlabs.

By its own count, the independent gaming device testing laboratory is licensed in more than 420 jurisdictions. It is relied on to provide accurate examination of programs and gaming and lottery devices for a wide variety of markets.

But for some intriguing reason, it hasn’t been able to crack the Illinois casino market. On Friday in a hearing before the Illinois Gaming Board (IGB), the company hopes to change that after what figures to be a fascinating exchange of testimony. The licensing matter is officially called BMM Testlabs vs. Illinois Gaming Board.

If that sounds contentious, there’s be a good reason: BMM alleges it has been treated unfairly in its attempt to crack the lucrative Illinois market after losing out to rival Gaming Laboratories International (GLI), a behemoth in that end of the business. Following a 2016 bid for services, BMM found itself shut out of Illinois after the IGB issued an exclusive, three-year contract to GLI.

In a growing market at a time in history the gaming industry is exploding with technological advancement, it was a substantial knockdown. BMM is now attempting to rise from the canvas.

To say the least it’s coming back swinging. In raising the issue of potential favoritism by IGB staff members that have since resigned from the regulatory agency, BMM’s shots promise to sting.

Then there’s the exclusive agreement itself. BMM argues that Illinois is the only substantial jurisdiction in which it has been shut out. Of course, you might counter that GLI isn’t a heavyweight in the test lab business for nothing. It has generated a lot of satisfied customers across the country and beyond.

Of course, it’s also possible that two warring corporate entities aren’t above hitting below the belt to secure contracts. It’s clear BMM contends this is the case at GLI – an accusation denied by the lab giant.

But let’s just say BMM has been in this position before, several times, in fact. By its count, it came up against substantial opposition in Indiana, Arkansas, South Dakota, and Missouri before prevailing with regulators. In each of those states, it contends, its strongest opposition didn’t come from the governing bodies, but from representatives of GLI lobbying for exclusivity.

But did I say these should be good days for BMM?

CDC Gaming Reports reported that GLI had agreed to pay $125,000 in July to Nevada authorities to settle a three-count complaint it faced alleging a failure in testing and certification it performed on a product for Interblock. GLI’s attorney responded that the company was extremely efficient over the last six years and had a minuscule error rate.

Which is great news, overall, but lacks much meaning to real regulators. It’s like saying Mrs. O’Leary’s cow gave great milk until it kicked over a lantern and started the Great Chicago Fire.

It was the first time in Nevada history that an independent testing lab had been fined by the Gaming Control Board and Gaming Commission.

It’s not, however, the first time GLI has been fined.

Back in 2011, Tennessee lottery regulators entered into a substantial monetary settlement with the company after a civil dispute over quality control issues. In another settlement the following year in Missouri, gaming regulators in that state fined it $25,000 for testing errors.

In fairness, that’s still not much bad news for a company that tests thousands of devices and systems each year and controls nearly three-quarters of the industry’s independent testing lab market.

So, the idea that GLI is on the ropes is simply not true. In fact, the issue really isn’t about GLI at all. It’s about whether Illinois gaming authorities did credible due diligence and didn’t play politics before awarding an exclusive deal to a test lab giant.

Win or lose, if the BMM-IGB hearing establishes that much, it will have done a service not only to itself, but to the industry as a whole.

Contact John L. Smith at jlnevadasmith@gmail.com. On Twitter: @jlnevadasmith.