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The California Lottery, troubled by two legal decisions that have hurt sales, has awarded its $20 million to $30 million account to Grey Advertising, Los Angeles, following a mandatory review.

The appointment will be finalized at a California State Lottery Commission meeting Feb. 21.


Incumbent J. Walter Thompson USA, San Francisco-which held the contract for the maximum five years and claimed it saved the state $7 million in media costs from 1992 to 1995-has called on the lottery to re-examine the review with an independent media-buying analysis.

The agency has not taken steps to formally protest the decision.

"We don't only focus on costs; we focus on the total marketing package, the best all-around bid," said Susan Kossack, lottery advertising director, in response to the JWT request.

She said JWT's numbers were based on savings over average media cost.

"Other agencies also are more efficient than the average," she said. "The bids are written into the contract and the agency [Grey] has to perform to the bid."

Larry Varnes, vice chairman-chief strategic officer at Grey, said it has its own program for assessing cost-effectiveness of media buys.

In the lottery competition, of a possible 100 point score, Grey had 92.3, followed by Asher/Gould, Los Angeles, with 87.9, JWT with 84.6, Young & Rubicam, San Francisco, with 68.0, and Rogge Effler & Partners, Los Angeles, with 58.2.

The pitch was based on a new game the lottery was considering.


In 1992, when JWT won the account, previous incumbent Dailey & Associates, Los Angeles, sued the lottery claiming illegal terminationt. The suit was settled out of court, Ms. Kossack said.

The lottery, with sales of $2.1 billion in the 1996 fiscal year, suffered a setback last year when a court declared its Keno game illegal and the state attorney general outlawed Scratcher vending machines responsible for about $200 million in annual sales.

For a time, the lottery stopped advertising.

Officials now are optimistic about reaching the $2 billion sales mark for the fiscal year ending June 30, 1997.

The Grey office serves gaming clients including ITT Sheraton's Caesars Palace in Atlantic City, N.J. Because no facilities are in California, Grey avoided conflict with the California lottery account.

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