With Northstar terminated, what will the Illinois Lottery do now?

Aug 23, 2014, 10:27 pm (15 comments)

Illinois Lottery

So what's next for the Illinois Lottery?

That's the big question looming in the wake of Illinois Gov. Pat Quinn's politically-expedient move late last week to fire Northstar Lottery Group. Quinn made history late in 2010 when he inked a 10-year contract with Northstar to become the first-ever private manager of any state lottery in the nation. Two other states now have private lottery managers — Indiana and New Jersey.

Quinn's move last week to terminate Northstar may prove too little too late in terms of helping him get re-elected Governor in November. But at least his action fully acknowledges that Northstar has been chronically underperforming ever since it won the Lottery management contract nearly four years ago.

Call it a tactical blunder on Northstar's part. But with each passing year, it became increasingly clear that Northstar had grossly overstated the revenue it could generate as private manager when it competed against two other 2010 finalists — Camelot and Intralot — for the Lottery contract.

But what Quinn hasn't yet acknowledged — though it was clear to many observers four years ago — was that the whole process by which the state of Illinois selected Northstar in the first place was riddled with highly questionable moves, as the Auditor General of Illinois subsequently addressed in a damning report his office issued in June of 2011.

Of course, in a response to the Auditor General's report, the Illinois Department of Revenue, which oversaw the Lottery at the time, tried to defend how it handled the private manager selection. But the Auditor General didn't buy into most of what was offered as a rebuttal.

So with Quinn's apparent blessing, Northstar stayed in place until the Governor's hand was forced last week.

Now it will be up to Illinois Lottery Director Michael Jones and Quinn to decide what happens next, as the Lottery now operates as a state entity independent of the Department of Revenue.

What's most likely to happen is that Northstar will cease almost immediately to have any say in how the Lottery operates. Though there will likely be a short period of de-entangling transition, the 140 staffers or so staffers believed to work for Northstar will no longer be actively — or majorly — involved in charting the Lottery's course.

In the short term, Jone's own Lottery staff likely will take over management. And yes, there most likely will be a new private manager, as the Illinois state law that created a Lottery private manager function is still on the books and isn't likely to be done away with anytime soon.

Jones then will likely be in charge of overseeing a new RFP to solicit interest in becoming the second-ever private manager of the Illinois Lottery. Don't be surprised if some of those former candidates for the job, including former finalists Camelot and Intralot, throw their hats back in the ring.

But keep in mind that Jones, as has been well documented, comes at running the Lottery from the perspective of a marketer.

When Jones took the job of director of the Illinois Lottery (for the second time) in the fall of 2011, he made it clear he saw the job as a marketing challenge: Upgrade the Lottery's tattered brand image and new Lottery game players would be drawn in, thereby creating new revenue for the state.

So the new RFP for the private manager is likely to emphasize that entities with an expertise in consumer-oriented brand marketing should consider responding. That could open the door to a much broader — and potentially quite interesting — pool of candidates for the Lottery private manager post than was the case the first time around.

As for the two ad agencies that now handle Illinois Lottery advertising — Downtown Partners Chicago and Commonground Chicago — they aren't likely to be dismissed anytime soon so long as Jones is calling the shots.

Though Northstar Lottery Group barred Jones (per terms of its contract) from any contact with the two ad shops for the past 18 months, Jones is known to greatly respect the advertising both agencies created in the early going in his second tenure as head of the Illinois Lottery.

Still, it can't be said with absolute certainty that the Lottery's relationship with either shop will remain for the long haul, as much obviously is in a great deal of flux at the moment.

Chicago Business Journal

Comments

Coin Toss's avatarCoin Toss

Who knows what's next, just hope it isn't another Northstar.

I'm not sure if this really would help Quinn to get re-elcted, or that he needs it to get re-elected.

Bang Head

Tialuvslotto's avatarTialuvslotto

"But what Quinn hasn't yet acknowledged — though it was clear to many observers four years ago — was that the whole process by which the state of Illinois selected Northstar in the first place was riddled with highly questionable moves, as the Auditor General of Illinois subsequently addressed in a damning report his office issued in June of 2011."

Wow!  Corruption in Illinois???  Whoda thunk it? Green laugh

Romancandle's avatarRomancandle

Hopefully add more transparency on the business side of operations for the players.

That would be a good start... but then again, this is IL

LOL

TnTicketlosers's avatarTnTicketlosers

Isnt Tennessee more corrupted that Illinois,I think Tennessee rank in the 4 spot for the year....Pretty bad....

alsports2000's avataralsports2000

Texas should do the same and fire whoever is responsible for "out of state " lotto winners. Texas is notorious for NOT producing more millionaires due to other states selling winning lottery tickets.....Rant

Gleno's avatarGleno

Todd 

Thanks for the lottery news and keeping us up to date.

HaveABall's avatarHaveABall

Hello, TnTicketlosers, depends on what benchmarks you have chosen.  For example, a few Illinois Governors have received/served fairly long prison sentences these past few decades.  However, several additional Congressors, Senators, Governors, and Mayors should have been impeached and imprisoned serving decade long terms and returning multiple millions of dollars swindled from ever decreasing amount of State Self Service and Income Tax payers. 

This is why "Chicago Metro Area" is referred to as "the windy city" ... politicians with windy/unintelligible and unhelpful speeches/thoughts.

rage

It is about time that they fired Northstar. We have way too many games and way too many scratchoffs that do not seem to be paying out all that much. Maybe we will get back to basics and drop some of the gimmick games.

uprrman's avataruprrman

i hope they get rid of my3 but keep the fire ball in. much better odds to win with fireballLurking

Coin Toss's avatarCoin Toss

I'd rather see them get rid of all the gimmicks - Extra Shot, Ez Match, etc, and restore things to what they were. Lucky Day Lotto was 5/39 for example, now it's 5/45.

On scratchers where you match a single digit number to win, usually a 5, 7, 8, or 9, two digit numbers were added to the player's numbers, no need for that.

rage

Quote: Originally posted by uprrman on Aug 31, 2014

i hope they get rid of my3 but keep the fire ball in. much better odds to win with fireballLurking

I agree with getting rid of my3. It is a complete waste of money. I would also like to see Hit or Miss go.

qutgnt

I was chatting with a retailer and he told me MY 3 and Hit or Miss will be gone, as no one buys them. I don't understand why they create these games as they are just smoke and mirrors. Unless you can tinker with the payback percentage offering more games with the same payback just dilutes the pool. Only so much money to go around and churn.

My last straw was when Northstar changed the Lucky Day Lotto matrix to 1 of 45 making it more than doubly hard to hit the jackpot. They mislead in the advertising "better prizes" but they don't tell you it is way harder to hit those prizes. Northstar wants to make every game have a mega jackpot to it thinking that will fuel sales. But since more money is paid out on top or top heavy it is the opposite. There is no churn hence less sales.

I will be curious to see what Illinois does here. My advice stop pushing mega jackpots on games like Lucky Day or scratchers. We already have that with mega, pb, and the new monopoly game coming. Quinn should increase the payback percentages on these games to compete better with horses or casinos. That is the smart way to go about it. Whenver a track descreases takeout their handle is higher and vice versa.

Also wouldn't it be awesome if a Governor was able to say no state income taxes on lottery winnings! Maybe the feds will do the same one day. Yeah right.

Scratch$'s avatarScratch$

Illinois has a pretty decent lottery - their scratchers are some of the best in the nation. Hopefully they'll find a good management company that will keep them on the right course.

myturn's avatarmyturn

They should have given the contract to Camelot, they operate the UK lottery. It is the most successful lottery in the world.

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