Northstar Asks for Lower Expectations
Aug. 8, 2013 – Northstar Lottery Group, the vendor which has operated the Illinois Lottery since 2011, requested that Illinois reduce its profit expectations by nearly half a billion dollars over the next five years.
The Chicago Tribune reported this morning that a letter from Northstar, sent July 29, asked the Illinois Lottery to reduce its expectations by $556 million over the next five years – a request not well received after two years of profit shortfalls and fierce litigation.
In fiscal year 2013, which ended June 30, Northstar fell nearly $150 million short of its own profit projection of $947 million, generating only about $800 million for the state. For the second year in a row, the Lottery Group could be fined more than $20 million for the shortfall.
After they failed to meet expectations in FY 2012, Northstar asked for almost $250 million in concessions – a request which was denied by a third-party negotiator. The Illinois Lottery then demanded a payment of more than $20 million, which Northstar has disputed in court.
Last month’s request for concessions came after the state legislature denied proposed changes to the Lottery’s “Lucky Day Lotto” game, a daily drawing game.
According to the Tribune, lawmakers said the proposal would change the game to a version of keno, allowing players to choose numbers every five minutes.
Lottery Superintendent Michael Jones told the Tribune that lawmakers don’t think the changes to Lucky Day would be legal, and they “don’t think it is particularly good public policy.”
Two years of profit shortfalls and disagreements over the way Northstar operates the Illinois Lottery have left state officials unconvinced that Northstar can ever perform up to expectations.
“This is never going to work,” State Rep. Jack Franks told the Tribune, “This is a company that … has underperformed, litigated and constantly asked for lower thresholds.”
Franks added that he wished Northstar would “withdraw and let us start over”.