Gov. Chris Christie wants to hand the functions to Northstar New Jersey, a joint venture that was the only bidder for the 15-year contract. The deal would give the state government $120 million upfront.
The Communications Workers of America union, which represents lottery workers, sued to block the deal, saying it should not be allowed to go ahead in part because there was just one bidder.
A two-judge panel issued an order Tuesday saying it will not grant a stay to prevent the state from signing the contract. The panel found that there would be no irreparable harm for allowing the deal to proceed.
But the court is still planning full consideration of the issues, though further hearings have not yet been scheduled.
Getting the money soon is a priority for the Christie administration, which is seeking to use the funds to help balance the state budget that runs through June 30.
The CWA has something to lose if the contract takes effect. State officials have said it would mean eliminating about 60 jobs in the lottery, but have also said that it would try to find other positions for the displaced workers.
The issue has become a partisan lightning rod, with six Democratic members of Congress asking Attorney General Eric Holder to review the deal.
State Sen. Barbara Buono, who is challenging Christie in this year's gubernatorial election, also objects.
