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New Jersey Plans Lottery Privatization

The private management partnership could generate nearly $7 billion beyond what the Lottery would raise with its existing management.
April 16, 2013

TRENTON – The New Jersey lottery plans to award a 15-year marketing contract to Northstar, a move that the state hopes will raise state revenue as much as $6.88 billion beyond what it would generate with its existing management, Bloomberg reports.

As part of the partnership arrangement, Northstar will pay the lottery $120 million upfront once the contract is signed, the New Jersey Treasury Department said.

“For more than 40 years, the Lottery has provided critical financial support to New Jersey’s institutions and educational programs,” said Treasurer Andrew Sidamon-Eristoff. The agreement with Northstar New Jersey Lottery Group will position the operation “for sustained growth and continued success in the face of an increasingly complex and competitive marketplace.”

In New Jersey’s fiscal 2012 which ended in June, the lottery generated $2.76 billion in revenue for a net $950 million to the state, the Treasury Department said. The Northstar group includes Gtech Corp. and Scientific Games Corp.

With the deal, New Jersey joins Ohio, Pennsylvania and Indiana in seeking private management for public assets.  Northstar runs the state lottery in Illinois, and while revenue fell $100 million below promised levels, an arbitrator ruled in November that the shortfall stemmed from state decisions.