TRENTON, N.J. — Democratic lawmakers took aim at New Jersey Gov. Chris Christie's plan for the private sector to run the New Jersey Lottery, saying the 15-year contract currently on the table benefits the winning company more than New Jerseyans.
At a hearing of the Assembly Budget Committee today, Democrats and small business owners said the proposal needs more public input because the Lottery — a $2.6 billion business — has been well run over the years and thousands of small businesses could be hurt by the move.
Christie wants to bid out the contract for $120 million over 15 years. The state would continue to own the Lottery, but the winning company would manage its sales and other operations and would be able to keep a hefty portion of any revenue gain.
Of the state's 130 Lottery employees, 60 to 65 could lose their jobs in the changeover, said Seth Hahn of the Communication Workers of America union. State officials have said they intend to have a new Lottery manager in place by mid-2013, though Christie delayed the process this year because of Hurricane Sandy.
"This latest proposal to monetize one of our most profitable and well-run assets is troubling to say the least," said Assemblyman Vincent Prieto (D-Hudson), the chairman of the Budget Committee. "Privatization should be reserved for when the government cannot perform that function well on its own. In the case of our award-winning lottery system, we have one of the most efficient operations in the world."
The Lottery is the fourth-largest source of revenue for the state, and has brought in more than $2.5 billion in ticket sales each year since 2007. In 2011, $930 million of its proceeds went toward scholarships and state education funds, psychiatric hospitals, centers for the developmentally disabled and homes for disabled veterans, officials have said.
Christie's plan requires no legislative approval, and lawmakers are not able to slow or stop it, but Prieto said "there are too many questions unanswered."
"This is a process that has really flown under the radar," he said.
Republican lawmakers countered that all the contract documents have been available online for months. They welcomed the Christie administration's plan, saying it was designed to maximize Lottery revenues and benefit all stakeholders in the end.
"What we're really looking at is a way to expand our Lottery's scope and attract new members," said Assemblyman Anthony Bucco (R-Morris). "It is incumbent upon government to look for new ways to do things better and this administration has done that time and time again."
But Prieto said the state's current network of 7,000 vendors may already have the gaming market fully covered. The contract being bid out by the state Treasury Department could allow the winning company to sell Lottery tickets online, a move that could end up poaching dollars from gas stations and convenience stores.
Salvatore Risalvato, executive director of the New Jersey Gasoline, Convenience Store and Automotive Association, said vendors only realize a 5 percent profit from Lottery tickets but that they usually make other, more profitable sales off of the same customers buying Lottery tickets.
Assemblyman Gary Chiusano (R-Sussex) said that if Democrats were really worried about small businesses, they would not have passed a bill to increase the state's minimum wage this week. Chiusano added that it's unfortunate the state is pursuing more revenue from gamblers, whom he said are often lower-income residents.
"Simply put, New Jersey is not doing enough about problem gamblers," said Donald Weinbaum, executive director of the New Jersey Council on Compulsive Gambling. "We have lagged behind other states on (this) public health issue."
State officials at the Treasury and Lottery Commission declined to attend Prieto's hearing today because they said it would be improper to weigh in on a pending bid.
However, the Lottery's executive director, Carole Hedinger, sent Prieto a letter on Tuesday saying his concerns were off-base and that the process has been transparent.
"Lottery is seeking to draw on the expertise of an experienced partner," Hedinger wrote, in order to remain "innovative and responsive to a fast-changing marketplace."