Illinois Lottery Officially Terminates Northstar Lottery Group’s ContractWednesday December 10th 2014
Illinois Governor Pat Quinn has officially terminated Northstar Lottery Group’s contract to run the state’s lottery after it failed to deliver expected revenue in each of the last three years. Northstar had made extravagant revenue promises in July 2011 and fell almost half a billion dollars short despite achieving record profits for the lottery.
Northstar’s disastrous tenure has led to calls by State Rep. Jack Franks (D-Marengo) to end the outsourcing of lottery services, suggesting that laws preventing the state taking direct control of the much needed revenue generator for education, transport and jobs could be easily amended to make that possible. Franks claims that private management of such games hasn’t worked anywhere in the country and that state lotteries would be better served by employing staff with the expertise to run them in-house.
Northstar has been criticized for a similar profit shortfall in New Jersey, while GTECH - one of the companies which makes up Northstar - has been running Indiana’s lottery where revenue targets have also been missed.
However, the Lottery Control Board will press ahead to contract another private manager and is hoping to find a larger field of bidders than previously, from a wider range of arenas, with previous lottery experience less essential due to the infrastructure already being in place. “Terminals and instant tickets are the knives and forks of the lottery business” said Michael Jones, Director of the Illinois Lottery, “We’re trying to hire a chef.”
Republican Gov.-elect Bruce Rauner has voiced fears that the terms of the termination agreement, which will allow to Northstar to continue running the lottery until a new manager is found or even until the end of the original contract, could see millions of dollars of taxpayers money awarded to the beleaguered company. “The termination agreement includes language that provides for annual payments of over $138 million through June 30, 2021,” claims Mike Schrimpf, a spokesman for Rauner, although Michael Jones dismissed the fears as unfounded.
It has been stated by state officials, however, that Northstar will be able to claim more than $12 million dollars in expenses incurred through closing down operations.
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