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Lone lottery bidder wins contract privatizing sales, marketing functions

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A joint venture called Northstar New Jersey Lottery Group won the 15-year, $120 million contract to privatize certain lottery functions, Treasury announced today.
A joint venture called Northstar New Jersey Lottery Group won the 15-year, $120 million contract to privatize certain lottery functions, Treasury announced today. - (NJBIZ file)

The New Jersey Department of Treasury said Friday afternoon it will hand the reins of the New Jersey Lottery's sales and marketing operations over to the only firm that bid on the controversial contract.

Northstar New Jersey Lottery Group — a joint venture of GTECH Corp., Scientific Games International and the Ontario Municipal Employees Retirement System — won the 15-year deal.

Northstar agreed to pay the state $120 million upon final award and execution of the contract, and has committed to generating at least $1.42 billion of total additional net income for the state over the life of the contract. That money would be in addition to what the lottery is expected to generate if operations remained unchanged.

In a press release, state Treasurer Andrew Sidamon-Eristoff said the lottery has a 40-year record of funding the state's institutions and educational programs. He said the new contract will protect that legacy "by positioning the lottery for sustained growth and continued success in the face of an increasingly complex and competitive marketplace."

However, the plan to partially privatize the lottery has drawn fierce opposition, most notably from the Communications Workers of America and the Asian-American Retailers Association, both of whom fear the deal could cost jobs and squeeze local retailers with higher fees or new competition from big-box stores.

Seth Hahn, legislative and political director for the the Communications Workers of America's New Jersey operations, blasted what he called a "risky, unpopular lottery privatization scheme."  

"True to form, they’ve decided to release their decision to award a 15-year contract at 4 pm on a Friday in the hopes that no one will notice," Hahn said in prepared remarks. "We are contacting the head of New Jersey State Lottery immediately to challenge the Christie administration’s giveaway, and will take every action at our legal disposal to stop it. This lottery privatization scheme is bad for taxpayers, bad for small businesses, bad for jobs, and illegal."

Despite interest from multiple gaming companies, the state received only one bid in response to its request for proposals, leading to more criticism from opponents.

Treasury said the pending award is the result of a two-year review of the lottery's current operations and its prospects in a fast-changing marketplace.

Carole Hedinger, executive director of the state lottery, said the companies involved in the Northstar joint venture have solid credentials.

"GTECH and Scientific Games have outstanding records of success in helping public lotteries grow their revenues and improve their operations," Hedinger said. "Their business plan for the lottery is solid, well-researched and builds upon our existing strengths."

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