Governor terminates lottery contract with private manager
From Illinois Business Journal news services
CHICAGO – The administration of Gov. Bruce Rauner announced today it has reached a termination agreement with Northstar Lottery Group, LLC and its parent companies as the private manager of the Illinois Lottery.
“This deal is an instant win for taxpayers because it immediately saves them $22 million,” General Counsel Jason Barclay said. “In addition, it releases taxpayers from the eleventh-hour deal former Gov. Quinn signed on his way out the door.”
The new agreement fully terminates Northstar as the private manager of the Illinois Lottery as of Jan. 1, 2017, or until a new private manager is selected. In addition, it also allows the new manager to select its own suppliers. Under the former agreement with the previous administration, the new manager would have been forced to give Northstar’s parent companies, GTech and Scientific Games, option rights, which would have significantly limited competition.
“This is a new day for the Illinois Lottery,” Acting Director B.R. Lane said. “This agreement will save the taxpayers hundreds of millions of dollars while allowing the Lottery to select a new partner that will help the agency grow and better serve its customers.”
The state will begin the search for a new private manager immediately.
The Illinois Lottery lost money last year for the first time since 2009, reducing the amount of money it generates for state programming by $125 million, according to a new report from the Illinois Legislature.
The loss comes after the state hired Northstar in 2010 to increase sales and profits.
The bipartisan Commission on Government Forecasting and Accountability’s report shows the amount of lottery money available for state programs fell by $125 million to $690 million during the fiscal year that ended June 30.
Lottery officials attribute the drop to prize payout ratio changes that cost about $77 million, according to the report.
The report painted a grim picture of the state’s relationship with Northstar. It said Northstar has consistently failed to meet profit targets, has gone to arbitration with the state numerous times, repeatedly paid penalties for not meeting targets and failed to expand the number of lottery retail outlets as promised.
The Illinois Lottery has gained notoriety of late for failing to pay out winnings of more than $25,000 due to the state budget crisis. Winners have filed a lawsuit asking the state to stop selling lottery tickets until the winners are paid.
Some information is from the Associated Press.