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Illinois Lottery run by private company starting Friday

Illinois LotteryIllinois Lottery: Illinois Lottery run by private company starting Friday

Illinois' private lottery manager takes over operations Friday, with both the company and the state envisioning greatly increased sales and more money for state coffers.

Although Northstar Lottery Group formally assumes the reins July 1, the transition to private management has been under way for some time. Regular players have seen new signage and the rollout of new games in recent weeks, but otherwise shouldn't notice a difference if they buy lottery tickets after the first of the month.

Northstar management, though, said they are focusing on bringing new people to play the lottery, the occasional player to play more often and the former player to try again.

"They will see there's a new energy, a new excitement, a new dynamic happening, which is really epitomized by a new logo which is much brighter, funner and more approachable," said Northstar CEO Connie Laverty O'Connor. "We're trying to make sure we will generate momentum that will generate more revenues."

Top 10 in profits?

Northstar is a consortium of three companies that held contracts with the lottery before the decision to privatize management, including Gtech, Energy BBDO and Scientific Games. Although the lottery will be privately managed, the state retains ownership and ultimate control over it.

Northstar will be paid a flat management fee of $15 million a year. Above that, the company will get a percentage of lottery profits it produces above $650 million, said Mike Klemens, spokesman for the Department of Revenue. Lottery profit that is used to support education funding is the amount the state gets, after prize payouts and operating expenses.

Over the next five years, O'Connor said, the company expects to increase those profits to between $750 million and $1 billion. The plan is to have Illinois place in the top 10 in profits among states that have lotteries. Right now, Illinois ranks 18th, O'Connor said.

Exactly the point, said Rep. Jack Franks, D-Marengo, a critic of the management deal.
"The only reason the state is going to a private manager was the Lottery Department under Revenue was not providing us a decent rate of return," Franks said. "If we had run the lottery like other states run them, Georgia or Massachusetts, we'd have $500 million or $2 billion more. Why not just hire the guys who run the Massachusetts lottery?"

More instant games

To increase profits, Northstar will focus on instant games where players buy tickets and scratch off emblems to see if they've won. Games like Lotto and Pick 3 and Pick 4 generate higher profit levels, but instant games generally account for more sales, O'Connor said. In Illinois, instant tickets account for about 53 percent of sales and 34 percent of profits, she said. In other states, instant tickets can account for 70 percent of sales and over half of profits, she said.

"There is a great opportunity here for growth," she said.

Northstar has already taken steps on that front, introducing a group of games in April where players can win guaranteed payments for life. For example, a $1 ticket could bring a winner $500 a week for life.

"We have set instant-game revenue records over the last few months," O'Connor said.

"We knew that players played games with million-dollar jackpots," said Jessica Powell, Northstar's vice president of marketing and advertising. "To some players, especially new players, they don't feel like they have a chance of winning that game. Win $500 a week for the rest of your life, that is a proposition that players can understand."

Northstar is also restructuring some prizes to "put more money into meaningful prizes that the consumer will feel better about," O'Connor said. "Some prizes are all at the top or the bottom, but not much in the middle. When you have a prize structure that delivers $20 to $200, people feel like they are more special. It's more important to win those prizes, even if you don't win as often."

More outlets, too

Northstar plans to add hundreds of new outlets where people can purchase lottery tickets, anticipating that more outlets will lead to more sales. In the last three months, O'Connor said, more than 1,000 applications have been filed by businesses interested in selling lottery tickets. So far, more than 400 of those applications have been approved by the state.

Recruiting retailers may be helped by a new agreement allowing them to be paid 1 percent of the price for cashing a winning ticket. Currently, retailers get a 5 percent commission on sales and 1 percent on prizes over $1,000, Klemens said. The new agreement covers prizes below that amount.

O'Connor said Northstar is in talks with Walgreen's and CVS about selling lottery tickets on a trial basis. The biggest potential growth region for sales is suburban Chicago, she added, which is densely populated but where sales performance "is nowhere near where it should be."

In Springfield, Northstar is leasing space in the 3200 block of Robbins Road for offices and a data center. O'Connor said the company has hired 70 employees, including five who used to work for the state.

The agreement to hire a private manager stipulated that state employees working for the lottery when it was managed by the state would not lose their jobs. Klemens said about 80 state workers, primarily in the lottery sales force, are now under Northstar management. Another 30 employees who work in licensing and finance remain under state supervision, he said.

Aledo Times Record

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5 comments. Last comment 3 years ago by pick4hawk.
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Coin Toss's avatar - shape barbed.jpg
Zeta Reticuli Star System
United States
Member #30470
January 17, 2006
9022 Posts
Online
Posted: June 30, 2011, 10:27 am - IP Logged

So they have been running the show for awhile.

The tickets are different, the paper is slicker, and the terminals have added monitors.

The logo is different, too. Here's the new one:

Those who run the lotteries love it when players look for consistency in something that's designed not to have any.

Lep

There is one and only one 'proven' system, and that is to book the action. No matter the game, let the players pick their own losers.

    haymaker's avatar - Lottery-012.jpg
    egg harbor twp.south jersey shore
    United States
    Member #112972
    June 29, 2011
    3104 Posts
    Offline
    Posted: June 30, 2011, 4:14 pm - IP Logged

    not sure what to make of this,normally i prefer private enterprise over gov't ops,but this is like so kind of hybrid.

      HaveABall's avatar - rocket

      United States
      Member #72448
      March 18, 2009
      959 Posts
      Offline
      Posted: July 1, 2011, 3:52 pm - IP Logged

      We'll know if this was a prudent action by the State of Illinois' trusted governmental Treasury guardians in about 12 months from today.

      Crazy

      Having millions of dollars in my financial accounts means more, consistent fun for me.Lovies

        DAMDAM's avatar - animal bear.jpg
        Illinois,
        United States
        Member #99787
        October 31, 2010
        498 Posts
        Offline
        Posted: July 2, 2011, 10:47 am - IP Logged

        Northstar management, though, said they are focusing on bringing new people to play the lottery, the occasional player to play more often and the former player to try again.

         

        OMG that is soo funny you want the former player to try try again hmmmm .  I am like many other former players I stop playing Illinois Lottery!!! I have played in Illinois for decades but I am know fool! If I can not win here why would I keep playing here?

        LOL Hmmmmmm I hope Northstar bring the new people they want and the occasional player to play more often as planed

        But us former player that brought over 75% profit or not trying trying again Smile. 

        Northstar managemment  you just push alot  of former Illinois player away.

        And thanks for the push  I should have try Indiana and online lottery decades ago.  Sweet $$$$

        DAM DAM DAM!!!!!!!

          pick4hawk's avatar - Trek HAND3.gif

          United States
          Member #19982
          August 9, 2005
          225 Posts
          Offline
          Posted: July 2, 2011, 4:44 pm - IP Logged

          Oh boy --I wonder how long until they go to electronic drawings?

          I will have to watch tonight and see.

          I won't play ever again if they do.

          *We may see something that isn’t there because of what we expect to see

          Or conversely, we may not see something because we don’t expect to see it.*