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Companies say they signed 15-year NJ lottery privatization contract

June 26, 2013


From NorthJersey.com

A 15-year contract allowing a private company to take over the operations of the New Jersey Lottery has been signed and is now in effect, officials announced Friday.

The company will run the lottery starting Oct. 1 but will begin transitioning into that role immediately.

The arrangement was opposed by Democratic lawmakers, who tried to block it legislatively, and by the union that represents lottery workers, which challenged the contract in court. Governor Christie vetoed the bill that attempted to halt the privatization, and a state court declined to intervene.

Christie was counting on the contract being signed before the end of the month. The agreement includes a $120 million upfront payment from the company — money that Christie relied on to help balance the state budget for the current fiscal year, which ends June 30.

A Treasury Department spokesman confirmed Friday that the state has received the $120 million.

Under the agreement, potentially worth billions of dollars, a joint venture called Northstar New Jersey will operate the lottery’s $2.7 billion annual sales and marketing functions for 15 years. It promised to increase lottery profits by at least $1.42 billion over the life of the contract. The joint venture will take a percentage of lottery revenue if it beats its profit targets and will pay the state penalties if it misses them.

Northstar was the only company to bid for the contract. It is composed of lottery operators GTECH and Scientific Games along with the Ontario Municipal Employees Retirement System.

“The business relationship we are launching with Northstar NJ will ensure that the Lottery remains a vigorous and successful competitor in the fast-changing, global gaming marketplace, and that it continues to generate reliable and growing revenues for State institutions and educational programs far into the future,” State Treasurer Andrew Sidamon-Eristoff said in a