Grapevine: Gambling with the lottery

September 10. 2012 5:41AM - Last modified: September 10. 2012 5:44AM

By NJBIZ Staff

One lottery watcher argued that the state's lottery is already working well, and that privatization is being explored largely for the $120 million cash infusion. "Why fix what ain't broken — unless you need $120 million?" the source said.

The state is proposing awarding a 15-year contract to operate the lottery, so "the question then becomes, for $120 million up front and 15 years of losing the management of the lottery, is it really worth it? And then if you want to bring it back into the state, you have to go and hire people, because you will have lost your staff."

The source said that instead of privatizing, the state could increase lottery revenue by investing more marketing dollars into the program.


Treasury spokesman Bill Quinn said the state is undergoing the RFP process for the potential to expand revenues going forward. "This is not a cost-savings effort here, this is a revenue expansion effort," Quinn said, adding the value of revenues over the 15-year contract are expected to be "much larger" than the $120 million up-front payment.


The state wants to get an "accelerated guarantee payment" as a down payment on the additional revenues the state expects to receive from the 15-year term contract.


"It also demonstrates that the contractor has the financial capability that we're looking for. We're looking for a company that has solid financial credentials, and the ability to make that initial payment indicates that they do have that kind of financial depth," Quinn said.


He said marketing, sales and product development would be handled by the contract manager, but all other operations would continue to be managed by the state.

Calm before the storm
Since St. Joseph's Healthcare System and St. Mary's Hospital ended negotiations with Ascension Health Care Network, all has been quiet on the hospital scene. An industry expert, though, says that will change: "I expect a lot of activity over the next 60 days."


And while there were no details given, there are several hospital transactions that could come to fruition in the coming weeks. Independents like Chilton Hospital and Hunterdon Medical Center have outstanding RFPs that have yet to be decided publicly, and still no word from Ascension on its negotiations with St. Clare's four hospitals. On top of that, the Centers for Medicare and Medicaid Services is accepting applications for new accountable-care organizations, and it is expected that several New Jersey providers will look to participate in this round of approvals.

Stopping Spectra
The effort to stop Spectra Energy's pipeline through Jersey City is increasingly an uphill battle. And any legal challenge by citizen groups would likely face a hard climb.


At least three citizen groups have threatened to sue, though it's unclear if they have the funding to see the matter through. One group — dubbed "Sane Energy Project" — has raised a mere $275 toward its goal of a $60,000 legal fund, though the group held an "emergency rally" at the construction site Sept. 5. Jersey City officials also stand prepared to challenge FERC in court over the matter. The city says it's a question of when — not if — legal action will occur.


Spectra Energy quietly began building the controversial New Jersey-New York pipeline in July, even though the Federal Energy Regulatory Commission is technically still reviewing the matter. FERC gave the project its OK in May, but the agency accepted opponents' request to reconsider the matter. If FERC were to change its mind, Spectra would be required to undo all of its construction work. However, sources tell Grapevine it's exceedingly unlikely FERC would reverse course.

An open Booker
They were in Charlotte, N.C., last week, hob-nobbing and networking. The New Jersey Democrats who would maybe, possibly, perhaps like to be governor knew the national convention was a place they had to be.


But the sentiment inside the Time Warner Cable Arena and at the related events was that Cory Booker essentially has right of first refusal in seeking the party's gubernatorial nomination.


"It's Cory's for the taking, if he wants it," said a convention attendee, summarizing the sentiment of Garden State delegates and guests. "Everyone is waiting for Cory to make his call."


Other Dems would step aside if the Newark mayor decides to run for governor, the source said. Booker, who gave a rousing speech at the convention, has reportedly said he will make a decision by December.

Grapevine reports on the behind-the-scenes buzz in the business community. Contact Editor Sharon Waters at sharonw@njbiz.com.


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