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HELENA (AP) – The state Justice Department has filed suit accusing two Nevada companies of failing to comply with their contract to develop and install an electronic monitoring system for video gambling machines in Montana.

The suit, filed in District Court here Friday, said Lodging and Gaming Systems Inc. and GAMET Technology Inc. of Reno took more than $900,000 of state money and never provided the promised computer system, which was supposed to be operating by Jan. 1, 2000.

Gene Huntington, administrator of the Gambling Control Division, said the agency has an obligation to taxpayers, and the video gambling machine operators willing to connect to the system, to take the legal action necessary to ensure the state gets what it paid for.

In addition to asking for the state’s money back, the suit demands the company be required to return computer equipment that the state purchased and had shipped to LGS offices for use in designing the software.

The complaint wants the company to compensate the state for an unspecified amount of taxes that the state expected collect because of improved monitoring of the machines after installation of the computer system.

Also, the suit requests an unspecified amount of punitive damages and wants the company to pay the state’s cost of hiring people to do the work that LGS allegedly failed to complete.

“If LGS can’t or won’t deliver a working system, we will pursue alternative means of developing a system,” Huntington said.

Neither Steve Urie, president of both companies, nor the companies’ attorney, Brad Van Ry, returned phone messages left at their offices.

“We have been unable to get this guy to deliver what we want,” Huntington said of Urie.

The dispute between the state and LGS surfaced June 5 when the department canceled the five-year contract because of what it said was a lack of progress in developing and delivering the promised monitoring system.

At the time, Urie said Montana gambling officials were being unfair. He said the system was ready for installation and the company has demonstrated it works, but the state wanted to get out of the contract.

In the suit, the state said Montana gave LGS and GAMET money and “received nothing of significant value in return.” Urie lied about progress being made on developing the system, when it would be operational and the cost of the project, the complaint said.

Urie provided equipment and software that was defective, and told the state it would have pay to additional money before he would complete work on the system, the suit alleged. He also claimed the GAMET was working on the system, even though the company had no employees before January of this year, it said.

The automated accounting and reporting system, expected to cost $2.4 million over six years, is intended to improve the tracking of how much money flows through thousands of video poker and keno machines in the state. The goal is to improve collections of the 15 percent video gambling tax.

About 70 percent of the 1,400 bars and casinos with machines agreed to hook up to the voluntary system authorized by the 1999 Legislature.

Tetragenics, a Montana Power Co. subsidiary, won the first contract to develop the network, but the bid was later rejected as incomplete and the state tried again. Lodging & Gaming Systems won the bid.

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