A bingo software firm is suing Treasurer Timothy Cahill and the state's Lottery chief for more than $20 million over the awarding of gaming contracts, claiming they engaged in a conspiracy to favor a Georgia company in exchange for money for Cahill's campaign.

In a federal suit filed last Friday, Rhode Island-based Bingo Innovative Software alleged that Cahill and Lottery Executive Director Mark Cavanagh blocked implementation of a TV bingo game despite projected profits for the cash-strapped system, in part to further their own careers and open private-sector opportunities for themselves and others.

Cahill aides ripped the suit as groundless.

Bingo Innovative claimed that Scientific Games International - the Georgia firm that has paid a close Cahill associate, Thomas Kelly, over $100,000 for consulting - won special favor from Cahill and Cavanagh as former Lottery employees received "lucrative" employment at Scientific.

Treasury general counsel Grace Lee called the case "absolutely meritless and one of the most frivolous lawsuits I've ever seen filed."

"This is nothing but a blatant attack to waste the taxpayers' dollars," Lee said.

Lee called it "absolutely" unusual that Cahill and Cavanagh were named as individuals.

Bingo Innovative said it lost out on lucrative contracts to Scientific, and blamed Cahill for preventing the introduction of a bingo game this year, in violation of an agreement between the company and the Lottery.

Cahill aides said the suit had mistakenly conflated two separate Lottery initiatives, Keno and bingo.

Scientific won a contract from the Lottery for a Keno racing game introduced in May 2007, which evolved later that year from featuring electronic cars to electronic horses. Earlier this year, the Lottery fired Scientific and hired Tournament One, a gaming and production firm with offices in Las Vegas and Connecticut, Cahill aides said. They said Bingo Innovative never competed for a Keno contract.

Both firms lost out on a 2007 contract for a TV bingo, although Bingo Innovative later convinced the Lottery to go along with a low-cost, 60-day pilot TV bingo game, Lee said. When the company failed to produce a cable TV partner, Lee said, the partnership ended.

In the suit, Bingo Innovative claimed that a Lottery-commissioned study found Bingo's game "a home run" and said it believed Scientific's Keno game inferior. The Lottery went forward with the Keno game, but has not established a bingo game.

In its suit, Bingo Innovative said Cahill and Cavanagh had acted for "perpetuation ... in their current public positions and for the opportunity of future employment both in the public and private sectors" and "in order to provide compensation to Scientific Games International for campaign fundraising" for Cahill.

"Such fundraising was undertaken by Scientific Games in a 'pay to play' scheme in which most-favored contractor status was awarded based on fundraising activity," Bingo Innovative claimed.

"Such fundraising was arranged by and through a political operative engaged by Scientific Games who enjoys a close personal relationship with" both Cahill and Cavanagh, the company said.

Kelly is a Quincy neighbor of Cahill's and has long been on the inside of the treasurer's political operation.

After a record-breaking year last year, the Lottery has largely flamed out amid the economic downturn. Revenues for the system were running 3.5 percent to 3.75 percent behind last year's pace, for a projected net loss of $30 million, Cahill said at a Dec. 15 hearing with state budget officials.

Bingo Innovative requested a jury trial. Its lawyer Leon Blais did not immediately respond to a request for comment.