In return, Northstar has said it can generate approximately $4.8 billion in net profit in the first five years of the 10-year contract. Northstar’s estimate exceeds projections of state-managed lottery profits by $1.1 billion.
NEW MANANGEMENT TO BOOST REVENUES
Privatization of the lottery’s management and marketing was pursued by lawmakers, who believe that new management and a fresh perspective will help boost revenues and tap into new markets. Currently, lottery sales are driven by older, less affluent players. When pursuing the lottery contract, Northstar laid out plans to attract younger, wealthier players through innovative marketing strategies, increasing the number of retail outlets in more prosperous communities, introducing new games and, potentially, through online ticket sales.
If the transition goes as planned, Northstar will take control of managing the state’s lottery on July 1, 2011. Negotiations of the Northstar contract are ongoing, and the state must complete a company background investigation. Additionally, losing bidders have 30 days to protest the contract.
QUESTIONS REMAIN ABOUT SELECTION PROCESS
The lottery management selection and bid process came under fire because officials refused to release information on the companies that bid for the contract, or identify committee members who reviewed the bids, until the contract was awarded. The lack of public information raised eyebrows and sparked criticism, though lottery officials contend that releasing too much information could have compromised the selection process.
Northstar also received additional scrutiny because of the company’s current ties to the state’s lottery program. Northstar is composed of three vendors that already hold contracts with the Illinois Lottery including GTECH, which has a contract for lottery machines, Scientific Games, which supplies instant tickets, and Energy BBDO, which handles advertising. Critics questioned whether Northstar should be allowed to essentially supervise itself. The other contract finalist, Camelot Group, is the long-time manager of the United Kingdom National Lottery.
While Governor Pat Quinn said that Northstar’s familiarity with Illinois’ Lottery is a positive, a Camelot spokesman criticized the selection as a preservation of the “status quo.”