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Retail group hopes to open dialogue with state over lottery privatization

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A Main Street retail group opposing the Gov. Chris Christie administration's call for bids to privatize state lottery operations hopes an upcoming Assembly committee hearing will open discourse with the governor's office on the effect such a contract would have on small businesses.

"The negative impact this privatization will have on small businesses and jobs and the state economy is the part of the story that no one has considered, including the governor's office," said Satish V. Poondi, director of legislative affairs for Green Brook-based Asian-American Retailers Association, which formed the Big Gamble NJ coalition with the Communications Workers of America. "This hearing will be the first time any public comment on this issue is taken, when really the retailers who have built this lottery should've been included in the conversation on day one."

While New Jersey grossed $2.8 billion in lottery revenue last year, the administration believes contracting lottery sales and marketing operations to a private company could bring in more revenue and launch an Internet lottery business — which Poondi said would shift lottery sales away from small retailers and block new retailers from entering the market.

But a spokesman for Lottomatica subsidiary GTECH Corp., one of four potential bidders for the lottery contract, previously told NJBIZ the coalition's concerns are unfounded, as the firm's current online lottery business in Illinois has barely reached 1 percent of overall sales, and it could take up to five years for a state's Web-based sales slice to grow to 10 percent. The spokesman was abroad today and could not be reached for comment on the Assembly hearing.

Poondi said the coalition's efforts have garnered support from Democratic legislators, including state Sen. Barbara Buono (D-Edison), who formerly chaired a Senate committee that held hearings on the Jon Corzine administration's proposal to privatize lottery operations and ultimately rejected the move several years ago.

In a statement, Buono said "our state lottery has seen growth over the past several years while keeping administrative costs at a minimum, (so) why open an efficiently run system to the possibility of disputes, unmet goals and uncertainty?"

"Many New Jersey small businesses are reliant on lottery ticket sales and the resulting secondary purchases, and it is unclear how this proposed privatization would affect their businesses," she said.

Poondi said he hopes legislators attending the Assembly hearing will weigh the costs and benefits of the proposal and put the coalition on a road to "actually have that discussion with the governor's office."

"The governor's office says it wants to raise lottery revenues, but why does it take the word of one bidder saying it can make that happen over the thousands of retailers who have been driving the lottery's success and are willing to work with the state to make it better?" Poondi said. "If this is the way New Jersey is doing business, than I have a bridge in Brooklyn to sell the state."

The original deadline for companies to submit proposals to the Division of Purchase and Property had been Nov. 15, but the state Treasury extended it to Dec. 11. The Assembly Budget Committee hearing will be held in Trenton at 10 a.m. on Wednesday.

Write to the Editorial Department at editorial@njbiz.com

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