Earlier this week, it was announced that the Illinois Lottery and its operator Northstar Lottery Group have decided to part ways. The reason for their split is the fact that the company has failed to generate the expected revenue for more than three years. The termination agreement was signed on Tuesday, December 9, by Gov. Pat Quinn.
Earlier this month, Northstar reported the highest profits it has ever generated, but the amount was still $500 million less than expected.
A spokesperson for Quinn’s administration stated that the governor has always demanded that all contractors need to be able to take responsibility for their financial and overall performance. This is why he decided that it was time for the agreement between the local lottery and Northstar to be brought to an end.
As the contract was terminated, the Illinois lottery is expected to increase its profits, so as to be able to financially support education and to boost local economy.
Michael Jones, Director of the Illinois Lottery, stated that this decision will be beneficial to both parties. He also shared he believed that the state will not repeat the same mistakes that resulted in the selection of Northstar three years ago. Mr. Jones said that more bidders should be attracted and they will not need to have any previous lottery experience. After all, all the necessary physical and organizational structures, i.e. terminals and tickets, are already in place.
Illinois is not the only place where Northstar has failed to deliver the expected lottery revenues. The company, which is actually a consortium of two gaming operators – GTECH and Scientific Games, posted a decrease in New Jersey’s turnover, as well. What is more, GTECH, which is responsible for Indiana’s lottery, has reported on a slight drop in revenue there.
As the split was announced and the deal was inked, all legal proceedings against Northstar were put to an end. Mr. Jones also shared that GTECH and Scientific Games will keep on providing their services within the territory of the state up to 2018. This, however, was not welcomed by Gov.-elect Bruce Rauner and his supporters.
According to Mr. Rauner, the deal with the above-mentioned companies is bad for the state and will “cost taxpayers tens of millions of dollars.”
State Rep. Jack Franks stated that he considers it necessary for the lottery to be managed by the state and not by a private company.
Mr. Jones also announced that Northstar will be in charge of the lottery until its new management is appointed. Yet, it seems that the state and the Illinois Lottery itself will make all the important decisions, concerning its profits and their growth.
The state may pay $12 million to Northstar so as to reimburse the losses the company will experience after the termination of the agreement. However, the former lottery operator will have to provide relevant proof of these losses.
