Turnaround for Northstar after two years of missed targets
Increased sales mean New Jersey's lottery contribution to the state budget is on track to meet its target for 2016 after falling short the first two years of a long-term contract with a private operator.
The operator of the lottery's sales and marketing, Northstar New Jersey, is budgeted to return $1 billion to the state to help fund programs for education, disabled veterans and senior citizens. Through the first three months of the 2016 fiscal year its contribution total was $220 million, commission chairman Frank Ragazzo said, an increase of 7.3 percent over the $205 million the same period last fiscal year.
The final contribution amount won't be known until after the fiscal year ends June 30, but "We are, at this point, going in the right direction," Ragazzo said Thursday.
Deputy State Treasurer Thomas Neff also said the state anticipates seeing much more money back from the lottery for the 2015 fiscal year than planned. Northstar had originally agreed to send back $1.037 billion to the budget, but revised that figure down to $930 million. Unaudited lottery commission figures at the end of June showed the contribution to the state to be $900 million.
Neff declined to say about how much the actual contribution back to the state for last year would be, or where that additional money would come from. The lottery has in the past transferred money from previous-year sales to support the state budget and increase its bottom-line contribution. And any potential penalty levied against Northstar for missing its contractual target in 2015 could add to that amount going back to the state. An independent accounting of the 2015 financials is expected in several weeks.
"It's too premature to give a final number. It's still being audited. It's definitely higher than $930" million, Neff said.
The contract with Northstar and its shortfalls the first two years running the sales and marketing of the lottery have come under scrutiny by the Legislature, which has announced a pair of hearings on the group's performance so far in the 15-year contract. Even though the lottery hit record ticket sales in each of those first two years, Northstar and the state have said the missed targets were due to bad weather and a national decline in sales of Mega Millions and Powerball.
New changes to Powerball that increase the likelihood of reaching a $1 billion jackpot for the first time are anticipated to stoke player interest and resurrect sales. And new games for the upcoming holiday season should yield "some good sales," Ragazzo said.
Through the first three months of the 2016 fiscal year, overall ticket sales were nearly $750 million, an increase of 6.3 percent over the $705 million recorded at the same point last year, Ragazzo said.
The improved sales were due to a large Powerball jackpot, "healthy" ticket sales and two new Fast Play games, the Treasury Department said.
The state is also expected to recoup money lost during a five-day outage across nearly half its 7,200 lottery retailers. Northstar will be assessed a "service level credit" of $474,000 that will be deducted from its October invoice, treasury spokesman Joseph Perone said. The August outage was related to a printer driver upgrade required to roll out those Fast Play games, which print tickets with instant results.
"All state vendors are held accountable for their performance," Perone said.
Northstar representatives declined to comment, referring questions to the Treasury Department.