NJ Lottery Faces $136 Million Shortfall

NJ Spotlight News | September 17, 2015
NJ is not seeing the revenues it expected by privitazing the lottery and now faces a $136 million shortfall.

By Briana Vannozzi
She’s hoping for the big win. Carol Thomas isn’t alone, New Jersey is still waiting for it’s payoff after privatizing the state’s lottery system. According to documents obtained by the Associated Press, the deal is not bringing in the expected revenues and there’s a $136 million shortfall.
“It’s exactly what everybody thought was going to happen,” said CWA Political Director Seth Hahn.
The state’s largest public worker’s union tried to block the deal. The 2013 contract with the private company Northstar, promised to generate about a $1.5 billion in income over the next 15 years. But so far, it’s been missing the target.
“Unfortunately this is business as usual when it comes to privatization in New Jersey. When we look at motor vehicle or some of these other things we have a company with a record of failure who comes in because they have political connections and then tax payers and people who depend on services are left out in the cold,” said Hahn.
Critics have pointed out that Northstar contributed to the Republican Governor’s Association while Gov. Chris Christie was leading it, then hired both the lawfirm of his political ally, former Port Authority chairman David Samson and the communications firm of Christie’s campaign strategist.
“How many more times do we have to get burned before we actually realize that privatization is really open for political abuse,” Hahn said.
Prior to Northstar, New Jersey kept 34 cents for every dollar in ticket sales. Now, because expenses are higher under the private company, the state keeps just 30 cents of every dollar. Even though overall ticket sales are up to just over $3 billion, the state will only get about $900 million.
The state says targeted revenue is down because more people are buying scratch-offs, which are less profitable than the big-time Mega Millions and jackpots. But lottery players here told us the big time tickets are the ones they do buy.

“I try and play every Wednesday and the Powerball comes out on Thursday,” said Carol Thomas.
“Yeah, I don’t buy any scratch offs.” said Mickey Zawatcki.
The Treasury Department today, would only say that, “Lotteries across the country are experiencing decreased revenues.” Adding, that “Although near-term financial results have not met our high expectations, critical investments by Northstar prevented further revenue losses and will position the Lottery for success in the future.”
Northstar piggybacked, deflecting questions about the revenue, “New Jersey Lottery remains one of the top-performing lotteries in the country….” They said, adding their commitment to “Enhancing player and retailer experiences and further increasing contributions.”

Under the contract New Jersey could fire Northstar if they don’t hit their revenue mark for two consecutive years, but that would mean reconfiguring the department yet again, and giving this dream a chance would be deferred.

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