Turnaround for Northstar after two years of missed targets
Increased sales mean New Jersey's lottery contribution to the state budget is on track to meet its target for 2016 after falling short the first two years of a long-term contract with a private operator.
The operator of the lottery's sales and marketing, Northstar New Jersey, is budgeted to return $1 billion to the state to help fund programs for education, disabled veterans and senior citizens. Through the first three months of the 2016 fiscal year its contribution total was $220 million, commission chairman Frank Ragazzo said, an increase of 7.3 percent over the $205 million the same period last fiscal year.
The final contribution amount won't be known until after the fiscal year ends June 30, but "We are, at this point, going in the right direction," Ragazzo said Thursday.
Deputy State Treasurer Thomas Neff also said the state anticipates seeing much more money back from the lottery for the 2015 fiscal year than planned. Northstar had originally agreed to send back $1.037 billion to the budget, but revised that figure down to $930 million. Unaudited lottery commission figures at the end of June showed the contribution to the state to be $900 million.
Neff declined to say about how much the actual contribution back to the state for last year would be, or where that additional money would come from. The lottery has in the past transferred money from previous-year sales to support the state budget and increase its bottom-line contribution. And any potential penalty levied against Northstar for missing its contractual target in 2015 could add to that amount going back to the state. An independent accounting of the 2015 financials is expected in several weeks.
"It's too premature to give a final number. It's still being audited. It's definitely higher than $930" million, Neff said.
The contract with Northstar and its shortfalls the first two years running the sales and marketing of the lottery have come under scrutiny by the Legislature, which has announced a pair of hearings on the group's performance so far in the 15-year contract. Even though the lottery hit record ticket sales in each of those first two years, Northstar and the state have said the missed targets were due to bad weather and a national decline in sales of Mega Millions and Powerball.
New changes to Powerball that increase the likelihood of reaching a $1 billion jackpot for the first time are anticipated to stoke player interest and resurrect sales. And new games for the upcoming holiday season should yield "some good sales," Ragazzo said.
Through the first three months of the 2016 fiscal year, overall ticket sales were nearly $750 million, an increase of 6.3 percent over the $705 million recorded at the same point last year, Ragazzo said.
The improved sales were due to a large Powerball jackpot, "healthy" ticket sales and two new Fast Play games, the Treasury Department said.
The state is also expected to recoup money lost during a five-day outage across nearly half its 7,200 lottery retailers. Northstar will be assessed a "service level credit" of $474,000 that will be deducted from its October invoice, treasury spokesman Joseph Perone said. The August outage was related to a printer driver upgrade required to roll out those Fast Play games, which print tickets with instant results.
"All state vendors are held accountable for their performance," Perone said.
Northstar representatives declined to comment, referring questions to the Treasury Department.
So...they're bragging about getting closer to a reduced objective ?
Yea but they are ALMOST at the revised lower figure! They should be very proud and all get raises!
"Northstar had originally agreed to send back $1.037 billion to the budget, but revised that figure down to $930 million. Unaudited lottery commission figures at the end of June showed the contribution to the state to be $900 million."
Mr. Ragazzo. I had to put my a/c on because of all your hot air. For the lottery uneducated, Ragazzo is a Christie political appointee. His real job is he is a real estate agent. He works p/t and gets $5.000 a year for his expenses. Ragazzo, you state that your corporate pal, Northstar, will see a bump in sales because they are getting a near half million dollar credit because of a computer glitch. However Ragazzo, you leave out the fact that Northstar is owned by the company that committed the half million dollar computer glitch. So the company who owns Northstar, Gtech (now known as International Gaming Technologies) who since 1984 has been the technical arm of the NJ Lottery, pays a fine from themselves to themselves. That's funny. Moreover Ragazzo, to predict nine months before the end of the 2016 fiscal year, that the corporate america company that now runs NJ Lottery sales, your pal Northstar, is finally going to hit their bid numbers is laughable. After all, Northstar has NEVER hit their bid numbers in the history of their company. Their resume shows numerous state fines and a firing by the Illinois Lottery. You and your pals have even REDUCED Northstar's original New Jersey bid numbers. Hey Ragazzo, what a bid system! You justify the bid reduction to Powerball problems and the weather. The weather? I didn't know New Jersey was Greenland. You further state that the recent changes in the Powerball Game will increase Northstar sales revenue. Well if that's true, why did you and your NJ Lottery mismanagement political appointee hacks hire a 100 million dollar a year "lottery sales expert", your pal Northstar? Your corporate genius pal, Northstar, has already significantly jacked up the odds on the New Jersey Cash Five Game. Heck, a child of five (for free) can not only do that but raise the price of a Powerball ticket from $1.00 to $2.00. A child of five can also, to create bigger jackpots, raise the Powerball jackpot odds from 175 to 292 million to 1. You know raise lottery game odds from ludicrous to more ludicrous to create bigger jackpots because you, your 100 million dollar a year pal Northstar, and your political hack NJ Lottery mismanagement have no real sales solutions. Moreover, Ragazzo it is not only about lottery sales. Take off your Northstar skull cap, you are going to learn something. If you sell a product for $1.00 and that product costs you 2.00 to make, you are a moron. Northstar operating just the sales and marketing departments of the NJ Lottery is costing 100 million dollars a year. Moreover, there are numerous other departments in the New Jersey Lottery that add to that cost. The ENTIRE prior civil service NJ Lottery use to cost 37 million a year. Your own republican budget officer recently pointed out that for 100 million dollars a year, your pal Northstar, returned 930 million dollars back to the State of New Jersey. He also pointed out that amount of money is the same amount of money that the 37 million dollar New Jersey Lottery returned to the State of New Jersey in 2008. Ragazzo, that was seven years ago. Mr. Ragazzo, I don't know if you and your NJ Lottery political appointee mismanagement have your Northstar skull caps on too tight or maybe as a political appointee lottery commissioner you simply do not have command of the issues. There is an upcoming NJ Assembly Budget Committee hearing about the Northstar NJ lottery contract. Maybe you should go there. Maybe you can sell somebody a house.
10/17/15
Observer414,
Very thought full commentary on NJ Lottery private operator's budget projections.
I have always been opposed to outsourcing of lottery management, but seeing what is happening in Illinois I have changed my mind.
The UK Lottery, which is the most successful lottery in the world, is run by a private company.
It doesn't matter what is happening with the government, all prizes are paid without delay.