As the Illinois Lottery edges closer to finalizing a massive deal with a new private manager, the state and the firm have chosen to keep many of the details secret despite past pledges of transparency.
The deal includes a tiered incentive system in which the new firm, Camelot Illinois, would be paid bonuses for exceeding various profit levels, documents show. But the proposed dollar amounts are not included.
That was among the few bits of information in the heavily redacted records the state released as part of the vetting process that gives the public until Friday to protest the contract. After Friday, the state can go ahead with final negotiations.
The lack of detail frustrated some lawmakers, who questioned how the public could evaluate the deal without more information.
"I think it's an outrageous process because nobody can tell me and nobody can tell the taxpayers that this is a good deal based on any type of metrics," said Rep. David McSweeney, R-Barrington Hills.
Rep. Lou Lang, D-Skokie, also questioned why more details have not been made available for public review.
"It is a significant issue that requires much analysis," he said in an email response to the Tribune. "This analysis cannot be properly accomplished without all of the information and data."
Camelot asked the Illinois Lottery to keep secret vast portions of its proposal, which the state has done despite repeatedly pitching a vetting process it said would be transparent for selecting a firm to run an operation that last year brought in more than $700 million in profit to the state.
The details could have significant consequences for cash-strapped Illinois, where the previous private manager won the lottery contract in a process criticized by state auditors. The Tribune later found the lottery — under private management — engaged in questionable practices of ending scratch-off games before all, or sometimes any, life-changing prizes were claimed.
On Sept. 22, the lottery announced Camelot Illinois — part of a family of companies that run the national lotteries in the U.K. and Ireland — would replace Illinois' current private manager, Northstar Lottery Group.
As part of the announcement, the state began a 14-day period required by law to allow anyone to protest Camelot's bid. Seven days into the protest period, the state released hundreds of pages of records of the bid and the state's review of it.
Large passages of the documents have been redacted at Camelot's request, particularly in sections dealing with how the company will be paid, whether it will face penalties if it does not meet profit goals and how it will provide increased transparency to the state and taxpayers. One section of Camelot's proposal titled "Evidence of Ability to Satisfy the Transparency and Integrity Plan" is entirely redacted except for the title.
Camelot defended its redactions, saying the firm has spent millions of dollars on its effort to win the contract in Illinois and releasing all the information in the bid would provide competitors a window into the company's proprietary information.
"As we have not finalized a contract with the state, we can't discuss details of a potential agreement. In bidding to partner with the Illinois Lottery to generate record sales and responsible growth, we submitted strategies that included confidential commercial information," the company said in a written response to questions from the Tribune. "Disclosing those details today would put our $10 million investment at risk. Such information is allowed to be redacted by law in Illinois and other jurisdictions."
The state also redacted the names of the individuals who evaluated the bid.
Lottery spokesman Jason Schaumburg said the lottery's redactions were in compliance with state law and the protest period is designed to allow the public to lodge a complaint about the way the state sought bids, evaluated them and awarded the contract.
McSweeney said the company and the lottery should at least provide information on what the company could earn in incentives based on its revenue projections.
"I don't understand why that's a competitive secret," McSweeney said. "I don't understand why that isn't being disclosed."
The lottery cautioned that nothing is final until the state completes negotiations and the contract is signed.
Even if the details are released after the contract is signed, lawmakers would have little recourse to change it.
"If they sign a contract, it's very, very difficult to terminate them," McSweeney said. "I don't understand why this isn't all transparent now. There should be an extra standard for transparency when there's only one bidder."
The selection of Camelot comes nearly three years after Northstar Lottery Group was fired by then-Gov. Pat Quinn in late 2014, and then fired a second time in a renegotiated termination deal by Gov. Bruce Rauner in 2015.
Northstar, a company formed by Scientific Games and IGT — two longtime vendors to the Illinois Lottery — was hired by the state in 2010 and became the first private company to manage a U.S. state lottery. Northstar's bid edged out Camelot on the strength of its commitment to bring nearly 15 percent higher revenues to Illinois than the U.K.-based firm offered.
While Northstar did bring record sales and profits, the relationship between Northstar and the state soon soured as the firm fell short of its lofty profit goals, prompting finger pointing between lottery officials and Northstar over who was to blame.
For Camelot, the state has proposed a set-up similar to the one it inked with Northstar. Under that deal, Northstar received a basic management allowance, but profits had to reach a certain level before Northstar got any bonus. After that, Northstar received a bigger percentage of the profits the higher profits rose.
Camelot proposes it be paid 15 percent of the profit it makes beyond the "guaranteed" level to a second level, then 20 percent of the profit from that second level to a third level, and then 25 percent of profit beyond that third level. But Camelot asked the state to not release the dollar amounts of those levels.
If those levels are set artificially low, it could mean more money for Camelot and less for the state.
Camelot, in an unredacted portion of its proposal, told the state it believed its proposal was fair, and the biggest bonus level would kick in only if it exceeded the profit levels it projected in its detailed business plan. That business plan, which typically contains details on how a firm expects to make its money, was also kept secret from the public.
Camelot has said it plans to undo one of the more controversial aspects of the Northstar arrangement: conflicts of interest. Northstar used its parent companies, two of the lottery's biggest and oldest vendors, to provide games and services, sparking complaints from the lottery that Northstar paid those vendors high fees.
The new arrangement bans such conflicts, and Camelot said it believes it can save $6.1 million a year by competitively bidding work done by subcontractors.