NJ moves to privatize lottery sales, marketing

TRENTON, N.J. (AP) - September 6, 2012

The state Treasury Department is looking to hand over sales and marketing operations to a private vendor next year. The state would retain ownership of the lottery under the plan, and officials said efforts would be made to find work for current lottery employees under the new arrangement.

New Jersey has the eighth largest state lottery in the country and employs 150 people, most of whom manage the network of lottery retailers.

The state believes a privately managed lottery could bring in more revenue, which it shares with education and social services programs. Last year, the lottery grossed $2.8 billion in revenue, and $950 million of it was directed to state programs and institutions.

"The goal of contracting out the lottery's sales and marketing functions is not to save money but to expand the lottery's revenue base so that it can continue to support the state's education programs and its institutions that serve veterans, the developmentally disabled and psychiatric patients well into the future," Treasury spokesman Bill Quinn said.

New Jersey isn't the only state looking into privatizing state lottery programs. Indiana is set to complete a deal to privatize its lottery by Nov. 1. Pennsylvania is researching whether to outsource its lottery and Illinois took its lottery private last year.

In New Jersey, the selected vendor would be required to pay $120 million up front and sign a 15-year contract.

Private vendors that intend to submit proposals to the state listened to a one-hour presentation Thursday morning. Afternoon site visits to lottery headquarters and warehouses also were required. The four vendors that attended were GTECH Corp., which supplies lottery technology in New Jersey; Camelot Group, Scientific Games and Intralot.

Vendors have until Nov. 15 to submit their proposals.

Carole Hedinger, the lottery's executive director, told the prospective contractors that New Jersey's demographics and other factors favor significant sales growth. The vendors would be responsible if revenue fell below expectations but would realize bigger profits if revenue exceeded targets.

In the current fiscal year, the lottery is on pace to generate nearly 5 percent more revenue than last year, Hedinger said.

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