TRENTON The state Assembly budget committee chairman is calling for a review of the contract privatizing parts of the state lottery following a news report that the firm hired to manage the system fell short of revenue benchmarks.
Assemblyman Gary Schaer (D-Passaic), reacting to a Bloomberg report Monday that Northstar New Jersey missed its projections by $24 million in the first fiscal year of a 15-year contract, said the shortfall puts programs for seniors, veterans and people with disabilities at risk.
The premise of the lottery contract is increasing lottery revenues according to Northstars own projections, Schaer said.
The administration brought in a company to work on the lottery system, and clearly the results are not what they should be, he said.
Christie inked the deal with Northstar in July 2013, making New Jersey the third state to hire a private firm to help run its lottery in hopes of boosting lottery sales.
Four months into the arrangement, which began Oct. 1, 2013, Northstar secured a contract amendment reducing its revenue goals, according to Bloomberg. Northstar cited slowed sales from Superstorm Sandy in its request.
Bloomberg also reported that lottery collections were down from July 1 through Oct. 31 of this year.
A Treasury Department spokesman did not respond to a request for comment Monday, but told Bloomberg that a 15-year contract should not be measured by the success or failure of one year.
The lottery is New Jerseys fourth-largest source of revenue, generating $2.7 billion in ticket sales a year. Proceeds are spent on scholarships, psychiatric hospitals, centers for the developmentally disables and homes for disabled veterans.
Under the contract, Northstar took over lottery sales and marketing. It paid the state $120 million up front and promised to generate at least $1.42 billion more over the next 15 years. In turn, Northstar gets to keep 5 percent of the increases if it meets its goals.
Christie can cancel the contract if the firm misses its revenue targets for two years.
Northstar is a consortium made up of GTECH, an Italian-owned company based in Rhode Island that has operated New Jerseys Lottery machines since 1984; Scientific Games International, situated in Georgia; and OMERS, a pension fund for workers in Ontario, Canada.
GTECH spokeswoman Angela Wiczek told Bloomberg the company has racked up "a long list of accomplishments" while managing the system.
Christies administration hailed the arrangement as a financial windfall for New Jersey that would reinvigorate and modernize the lottery system in ways the state couldnt. The governor pushed through the deal over the objections of the union representing lottery employees and New Jersey's Democratic state lawmakers.
Schaer jabbed Christies administration for time and time again, without fail exaggerating revenue estimates.
This is not isolated. This is consistent. I dont think theyve been on track once, he said. "One would think a Republican governor would in fact show a more conservative approach.
Samantha Marcus may be reached at smarcus@njadvancemedia.com. Follow her on Twitter @samanthamarcus. Find NJ.com Politics on Facebook.
Source: http://www.nj.com/politics/index.ssf/2014/11/lawmaker_calls_for_nj_lottery_review_after_revenue_falls_short.html
