Illinois Senate President John Cullerton says he’s “extremely disappointed” with the private company that runs the state lottery.
Cullerton says lawmakers believed a private firm would operate the lottery better than the state. He says financial reports indicate Northstar Lottery Group “is unable to live up to its commitments.”
Reports filed with the Lottery Control Board show Northstar is projected to be $716 million short of its $3.5 billion required sales target this fiscal year. The company must make “shortfall payments” to the state when it misses targets.
* But this is also a state failure. Scroll way down in this Tribune story and you’ll see this…
The firm became the nation’s first private manager of a state lottery in 2010. The selection process itself was not without controversy, prompting a scathing report from the state auditor general, which highlighted some irregularities and questionable practices. In one instance, a member of the evaluation team chosen by the governor to review and recommend a winner reportedly read nearly 2,000 pages of bid proposals in a single day. […]
Shortly after the company took over the lottery in July 2011, it began requesting that the state lower the net revenue promises set forth in the contract.
And scroll even further and you’ll see this…
In an appearance last month before the Lottery Control Board, Northstar CEO Timothy Simonson defended the company’s performance. He said the lottery has brought in an additional $450 million to fund education and capital improvements and such charitable causes as breast cancer research and veteran support programs.
The increase shows the firm has grown sales at a rate of 12 percent annually, compared with the 3 percent growth the lottery experienced under state control, Simonson said.
By the state’s own estimate, it would have taken a decade to reach the net revenue figures that Northstar achieved in the first year after taking over day-to-day operations of the lottery, he said.
This bid was goofy from the start. Northstar obviously over-promised and a cash-starved state fell for it hook, line and sinker. Northstar should be punished for its behavior, but spare me the outrage because there’s also no doubt whatsoever that moving to a private manager has considerably increased state revenues.