Greg Orman gambled on Chinese lottery tickets and lost.
The Kansas businessman who is running for U.S. Senate as an independent invested along with two longtime business associates in a company that partnered with the Chinese government to design and market scratch-off lottery tickets through the Shanghai Welfare Lottery Issuing Center.
Based in Las Vegas, WinWin Gaming had high hopes of expanding its lottery business throughout China, but soon went under after the Chinese government decided to stop partnering with smaller foreign companies.
The investment is one part of the diverse portfolio Orman is touting on the campaign trail as he tries to unseat three-term incumbent Republican Pat Roberts.
Through a controlling interest in Galt Funding LLC, Orman held 2.4 million shares, or a three percent stake, in WinWin, according to a 2006 filing with the Securities and Exchange Commission.
John Gronvall and Arthur Petrie — two Orman business partners — were among the largest shareholders as well, holding five percent and six percent, respectively, and sitting on WinWin’s board of directors. Orman’s Galt was first mentioned in a May 2004 SEC filing discussing a loan agreement between Petrie and Galt that gave Orman’s company the option to buy shares in WinWin.
To break into the Chinese lottery ticket market, WinWin CEO Patrick Rogers leveraged his experience as a casino manager as well as his contacts with former Secretary of State Henry Kissinger.
“Rogers also met influential Chinese through contacts who knew Kissinger, he said,” the Reno Gazette-Journal reported in 2005.
“We designed and created the ticket, and the promotion is always done by the Chinese government,” Rogers told the Gazette-Journal. According to its contract, WinWin’s take for each ticket sold ranged between 3 percent and 8.2 percent.
The company also created a TV show to help market the tickets. Rogers said he hoped to expand the business across China and wanted to create a “Powerball” game like the one played in the U.S.
Despite Roger’s enthusiasm, WinWin’s SEC filings show that its lottery ticket business never got off the ground, generating around $8,000 in revenue in 2005.
Citing “extraordinary stock speculation,” WinWin stated in its August 2006 quarterly filing that the Chinese Ministry of Finance “initiated a review of all contracts with foreign enterprises.” That included WinWin’s contract with the Shanghai Welfare Lottery Issuing Center.
The company eventually defaulted on loans and was forced into Chapter 11 bankruptcy.
Orman, who until recently was a political unknown who ran briefly against Roberts as a Democrat in 2008, has seen his past business dealings scrutinized heavily since Democratic nominee Chad Taylor dropped out of the race in September.
The 45-year-old, who lives near Kansas City, is worth between $21 million and $86 million, according to a recent financial disclosure. The bulk of that wealth is tied up in various investment vehicles, real estate holdings and small businesses. Orman’s most successful projects have come in the energy sector, and he recently took over Combat Brands, a boxing equipment distributor — a move that Orman says saved 50 jobs.
The Chinese lottery scratch-off venture isn’t Orman’s only odd investment. In 2011, the Princeton graduate became a director of Ganix Biotechnologies. The firm obtained $2.5 million in federal loan guarantees and a $725,000 tax break in order to set up a shrimp farm north of Las Vegas.
The company failed to take off and went broke within a year.
Orman’s relationship with Rajat Gupta has also put the candidate on the defensive. Orman and Gupta both invested in a company called Exemplar Wealth Management, and Orman has been listed as Gupta’s financial adviser. But Gupta, a former Goldman Sachs board member, is in prison serving time for an insider trading conviction. Orman has said on the campaign trail that the two are still friends and that they still have business dealings together.
The Roberts campaign points to these failures as evidence that Orman’s business record is not what he claims it is on the campaign trail.
“Greg Orman’s business career was built on the back of a Wall Street criminal and sustained on government contracts,” Roberts for Senate campaign manager Corry Bliss told TheDC. “First, Kansans learned Orman’s businesses received millions of dollars in handouts from the U.S. government, and, now, we find out one of his lucrative businesses was a leading investor in a company that profited from a gambling contract with the communist Chinese government.”
The Orman campaign defended his jobs record.
“Greg has a strong record as a successful businessman and has created jobs and opportunities throughout his entire career,” said Orman campaign manager Jim Jonas in a statement.
“Senator Roberts’ false and hypocritical attacks on Greg’s successful record as a businessman are the same Washington political games people are tired of, and are further proof that Senator Roberts is part of the problem in Washington.”
According to documents compiled by Open Secrets, Roberts holds investments in Chinese companies too, including Baidu.com, a search engine, and China Eastern Airlines, which is controlled by the Chinese government. Roberts’ stock portfolio includes domestic stock investments as well, such as Microsoft, Starbucks and Apple.
According to RealClearPolitics, the average of recent polls shows the race is tied.