NJ moves to privatize lottery sales, marketing

Sep 11, 2012, 12:24 pm (17 comments)

New Jersey Lottery

TRENTON, N.J. — Four companies interested in running portions of the New Jersey Lottery attended a mandatory information session in Trenton last Thursday, the first step toward privatization.

The state Treasury Department is looking to hand over sales and marketing operations to a private vendor next year. The state would retain ownership of the lottery under the plan, and state employees would continue to manage its operations though those jobs are not guaranteed.

New Jersey has the eighth largest state lottery in the country and employs 150 people, most of whom manage the network of lottery retailers.

The state believes a privately managed lottery could bring in more revenue, which it shares with education and social services programs. Last year, the lottery grossed $2.8 billion in revenue, and $950 million of it was directed to state programs and institutions.

"The goal of contracting out the lottery's sales and marketing functions is not to save money but to expand the lottery's revenue base so that it can continue to support the state's education programs and its institutions that serve veterans, the developmentally disabled and psychiatric patients well into the future," Treasury spokesman Bill Quinn said.

New Jersey isn't the only state looking into privatizing state lottery programs. Indiana is set to complete a deal to privatize its lottery by Nov. 1. Pennsylvania is researching whether to outsource its lottery and Illinois took its lottery private last year.

In New Jersey, the selected vendor would be required to pay $120 million up front and sign a 15-year contract.

Private vendors that intend to submit proposals to the state listened to a one-hour presentation Thursday morning. Afternoon site visits to lottery headquarters and warehouses also were required. The four vendors that attended were GTECH Corp., which supplies lottery technology in New Jersey; Camelot Group, Scientific Games and Intralot.

Vendors have until Nov. 15 to submit their proposals.

Carole Hedinger, the lottery's executive director, told the prospective contractors that New Jersey's demographics and other factors favor significant sales growth. The vendors would be responsible if revenue fell below expectations but would realize bigger profits if revenue exceeded targets.

In the current fiscal year, the lottery is on pace to generate nearly 5 percent more revenue than last year, Hedinger said.

AP

Comments

ressuccess's avatarressuccess

I wonder why New Jersey decided to private their lotto sales?

mcginnin56

Quote: Originally posted by ressuccess on Sep 11, 2012

I wonder why New Jersey decided to private their lotto sales?

Probably Agoraphobia, which is a fear of conducting business in public places. Privatizing would help minimize that phobia.

haymaker's avatarhaymaker

sales and marketing, thats OK as long as the state operates the draw and it stays a ball draw.

RedStang's avatarRedStang

Only way i see expanding the revenue base would be to introduce a boat load of new games. Next years outcome should be interesting.

JezzVim

Don't trust this move by NJ.   Why are they selling?   And think to yourself -  who is buying?

balyanango

Quote: Originally posted by haymaker on Sep 11, 2012

sales and marketing, thats OK as long as the state operates the draw and it stays a ball draw.

I too am in agreement with limited privatization, though I am wary of total privatization of lottery games, a hundred percent. The state should still oversee the lotto games. Total privatization of the lotto games may suffer the same pitfalls of privatizing social security.

dpoly1's avatardpoly1

California now has 4 Mega Millions Jackpot wins in 2012 ............

Disapprove

mcginnin56

Quote: Originally posted by dpoly1 on Sep 12, 2012

California now has 4 Mega Millions Jackpot wins in 2012 ............

Disapprove

Go West young man.....go West!!!  Yes Nod

dpoly1's avatardpoly1

Quote: Originally posted by mcginnin56 on Sep 12, 2012

Go West young man.....go West!!!  Yes Nod

The winner/s probably only get $1 after all of the California Taxes are taken out!

Thud

mcginnin56

Quote: Originally posted by dpoly1 on Sep 12, 2012

The winner/s probably only get $1 after all of the California Taxes are taken out!

Thud

Really? I thought it was less than that.  LOL

Cletu$2's avatarCletu$2

Quote: Originally posted by dpoly1 on Sep 12, 2012

The winner/s probably only get $1 after all of the California Taxes are taken out!

Thud

I don't think California taxes lottery winnings,which is surprising seeing as the state is bankrupt.Go figure!

whiteballz's avatarwhiteballz

Quote: Originally posted by dpoly1 on Sep 12, 2012

The winner/s probably only get $1 after all of the California Taxes are taken out!

Thud

california doesn't tax the lottery because the lottery is already a tax.

jamella724

The goals of NJ lottery are fantastic.  However, this will take gradual transition on the part of the management.

Ronnie316

Quote: Originally posted by dpoly1 on Sep 12, 2012

California now has 4 Mega Millions Jackpot wins in 2012 ............

Disapprove

Congratulations to CA. awesome work!!

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