New manager doesn’t need lottery experience
The Illinois Lottery and its private manager of three years, Northstar Lottery Group, have officially agreed to part ways, according to announcements from both parties. Under the termination deal, both GTECH and Scientific Games will provide games and services until a new management company is appointed.
Northstar, a division of GTECH, took over the management role in July 2011, but failed to deliver on the promised revenues, according to a report in the Lottery Post. The termination agreement was signed by Governor Pat Quinn, who ordered the action in September. At the time, despite record profits from the company to the state, revenues from the lottery still totaled nearly $500 million less than what had been anticipated.
“The governor demands every state contractor be held accountable for their performance?and that’s why we directed the lottery to end its relationship with Northstar,” said a spokesman for Quinn’s office. “Today’s formal contract termination concludes that process and will allow the lottery to improve profits and increase funding for education and economic development across Illinois.”
“We learned a great deal about this from our experience with the first bidding process, which only attracted a few bidders,” added Illinois Lottery Director Michael Jones, who said new bidders for the management role need not have specific lottery experience. “Previous lottery technical skills aren’t required,” Jones said. “Terminals and instant tickets are the knives and forks of the lottery business. We’re trying to hire a chef.”
The Post said Illinois has been “the most glaring failure for Northstar,” but the company has also fallen short of promised revenues in New Jersey. GTECH, chosen in 2012 to run the Indiana lottery, has also posted slightly less revenue than projected for that state’s games.
If the next lottery manager fails to reach revenue targets, “Perhaps that’s making a statement about what’s achievable in the lottery in Illinois,” saidformer Chicago Bears player Gary Fencik, now chairman of the Lottery Control Board.
The settlement, which allows Northstar to remain in the role for up to a year and possibly receive more than $12 million to cover its exit costs, met with criticism from Governor-elect Bruce Rauner.
“Despite our repeated requests, the Quinn administration has executed an eleventh-hour deal,’ Rauner spokesman Mike Schrimpf said in a statement. “We were not consulted or even informed. This is a bad deal that creates a new binding contract that will cost taxpayers tens of millions of dollars.”GTECH cited a clause in the termination agreement that provides “a termination for convenience fee and disentanglement services fees” to Northstar.
State Rep. Jack Franks said the state should go back to in-house management, saying, “It’s clear this experiment did not work in our state or any of the other states.”
GTECH announced said the company will stay on for approximately 12 months and may stay longer. “The termination agreement can be further extended for up to three six-month periods,” the company said in a statement. GTECH Corp. owns 80 percent of Northstar. Scientific Games International holds the remaining 20 percent interest.
