By Michael Hill
Correspondent
Lottery sales and revenues have been trending downward for the last couple of years across the country as consumer behavior changes, according to Northstar the company chosen two years ago to privatize the marketing of New Jersey’s lottery games for $19M a year.
Russell Knapp, the General Manager of Northstar NJ Lottery Group said “the decline in national game sales has continued into FY 2016; however, due to the investments made in improved products, equipment and services, Northstar was able to soften the effects on lottery sales and revenues.”
Northstar told the Senate Legislative Oversight Committee its expertise prevented big losses in New Jersey. 2015’s lottery revenue equals 960 million dollars, down by 5 million dollars from 2014.
Northstar says by adding instant games and focusing ones it can control – which excludes multi-state Mega Millions and Powerball – ticket sales and revenue to the state’s general fund are both up for the first 4 months of fiscal year 2016.
Carole Hedger, the Executive Director of the NJ Lottery Division said “there is one crucial reason for our success in combatting a debilitating nationwide trend and staving off the losses that impacted other states: A successful partnership with Northstar.”
The take on Northstar by the state lottery’s executive director was so glowing, she almost sounded as if she worked for the company instead of the other way around “I now feel comfortable that the NJ Lottery has the human, economic and technical resources necessary to meet the challenge.”
But, the oversight committee had questions: why did the state privatize part of the lottery in the first place? The executive director said the private sector could do a better job adapting to a fast-changing consumer demographic that wants instant gratification, “our job is to keep the lottery agile, nimble and creative.”
The Communications Workers of America says Christie set it up so that Northstar would be the only bidder to market the state’s lottery games. “This process is everything that people hate about politics in New Jersey,” said Seth Hahn the Legislative Director of CWA. The CWA says the Christie Administration tailored the state’s request for bids based on a legal battle Northstar had in Illinois. “The fact that the RFP was almost identical to Northstar’s Illinois contract shows that it was the preferred vendor to receive the contract.”
Committee chair Senator Bob Gordon challenged Nortstar on one of its companies buying a competitor and moving the business overseas to reduce taxes, a process known as inversion “Personally, I have some concerns about contracting with those organizations at least should be a factor considered about decisions about contracting.”
The issues raised here likely will result in legislation. As the partly privatized state lottery looks to grow revenues, it told lawmakers it will go slow on expanding to online sales of lottery tickets.