 In an unprecedented agreement for Illinois, Gov. Pat Quinn Wednesday
selected the Northstar Lottery Group to enter into a contract with
the state to privately manage the lottery.In winning the
contract, the Northstar consortium beat out the other finalist, the
Camelot Group, which manages the national lottery in the United
Kingdom. Last week, the two finalists gave their final pitches to
state officials at a public hearing.
Lawmakers authorized the Illinois Lottery last year to find a
private management group with explicit aims of raising sales and
profits.
Last budget year, lottery proceeds topped $2.2 billion. Of that
amount, $625 million went toward schools and $32 million toward
public works projects.
The state is hoping that private management can bring in an
additional $1.4 billion over five years to go toward schools and
public works projects.
But not all of the money under the lottery deal will come to
state coffers.
Under the 10-year contract, the state would pay Northstar $15
million per year to manage the lottery. Northstar would also get a
portion of lottery proceeds and the opportunity to earn bonuses if
certain profit thresholds are achieved.
Quinn said the bottom line is that a private manager for the
lottery would help bring in more money.
"(The lottery) has been for the past three or four decades a
source of revenue that's been stable but rather stagnant," he said.
"The decision was made by the Legislature to go in a new direction
with a private manager to try and enhance revenues of the lottery
and do so in a creative way."
State Rep. Jack Franks, D-Woodstock, is one of the lawmakers who
does not support a private manager for the lottery.
He expressed concerned that Northstar is made up of three
companies that already have contracts with the Illinois State
Lottery -- GTECH Corp., Scientific Games Corp. and BBDO Worldwide.
"It's impossible for those three entities that are already
running part of the Illinois Lottery, who have now won this new
contract, to police themselves. We're allowing the foxes to watch
the henhouse," he said.
Quinn said the bidding process was completely compliant with
state laws.
"I want to make it crystal clear that I take the oath (of
governor) very seriously. I do things honestly and openly.
Everything I've done in life I've tried to do according to my
conscience, and that is the only way to operate Illinois
government," he said.
Jodie Winnett, acting director of the Illinois Lottery, said
Northstar's knowledge of the state lottery system would help reduce
costs and bring in more profits.
"They are familiar with Illinois, familiar with the lottery.
Their plan is very much tailored to Illinois and (there is) lower
risk in implementing that plan," she said.
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One of the companies not chosen as finalist for the private
management bid also has some questions with Northstar and the
bidding process.
Greece-based Intralot S.A., one of the largest lottery management
firms in the world, submitted a preliminary bid to manage the state
lottery but was eliminated without reason.
Byron Boothe, vice president of government relations with
Intralot, said the company wants to know why the company's bid was
rejected and has not ruled out filing an official protest.
"When the consortium was formed with Northstar and the consortium
contained the current vendors (of the state lottery), it piqued our
interest," he said.
The company has seven days to determine whether or not to file an
official protest.
Carolyn Grisko, spokeswoman for Northstar, said the three
companies did nothing wrong in teaming up to put forth a bid.
"They came together because they felt that by teaming up they
would be able to offer the best level of service to the state of
Illinois. And clearly, their business plan will generate the most
revenue by the state's determination. That was what the Legislature
wanted," she said.
The state has posted information on its procurement process for
the private management of the Illinois Lottery on a state website:
http://www.illinoislottery.com/
subsections/Management.htm
The state will need four to six weeks to allow an outside
contractor to check into the business structure and ethical
background of Northstar before the private management contract can
be finalized.
[Illinois
Statehouse News; By KEVIN LEE]
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