Report: Ill. lottery manager short $100M on profit

Aug 2, 2012, 9:34 am (12 comments)

Illinois Lottery

SPRINGFIELD, Ill. — The Illinois Lottery's private manager fell nearly $100 million short of the profits it promised to deliver for the state.

But the Chicago Tribune reported Tuesday that revenues generated by Northstar Lottery Group still set an Illinois record. Illinois has fallen behind other state lotteries for years.

Northstar promised $825 million in net revenue when it took over the lottery in July 2011. A Tribune analysis found it had collected $726 million by the end of June.

That could mean hundreds of millions of dollars in penalties. The same month the company got the contract, it began seeking a reduction in what it promised. An arbitrator will decide the matter.

Thanks to Coin Toss for the tip.

AP

Comments

zinniagirl's avatarzinniagirl

Wonder if they will blame it on the increase in PB prices?   Or will they be man enough to say, we inflated our projected profits to get your contract?

dpoly1's avatardpoly1

OOOOOOOOOOOOOOOPS!

mcginnin56

Still a great performance considering Illinois's lousy sales for many years. Thumbs Up

Seattlejohn

I've been waiting to see if there's any blowback from Powerball upping their cost from $1 to $2; this may be the first sign of an issue.  I know powerball's idea was "bigger initial jackpot, quicker to huge jackpots where more people play, more publicity, more money to states & vendors"; I'm thinking this might not be the case afterall...

rdgrnr's avatarrdgrnr

"The same month the company got the contract, it began seeking a reduction in what it promised."

Now, that there is what you call one of them there "red flags".

Now, right there somebody shoulda said: "Hold 'er Newt! She's headed fer the barn!"

Dadgum straight, JimBob.

JonnyBgood07's avatarJonnyBgood07

Quote: Originally posted by zinniagirl on Aug 2, 2012

Wonder if they will blame it on the increase in PB prices?   Or will they be man enough to say, we inflated our projected profits to get your contract?

I Agree!

Cletu$2's avatarCletu$2

Quote: Originally posted by rdgrnr on Aug 2, 2012

"The same month the company got the contract, it began seeking a reduction in what it promised."

Now, that there is what you call one of them there "red flags".

Now, right there somebody shoulda said: "Hold 'er Newt! She's headed fer the barn!"

Dadgum straight, JimBob.

They just didn't know who's palm to grease,in Illinois it could be any number of officials from the govenor on down.So they decided to inflate the numbers to get the contract and immediatly started to back pedal once the ink on the contract was dry.It should be interesting to see how this plays out.

Littleoldlady's avatarLittleoldlady

If they are short about 100 million, how can the possible penalties be hundreds of millions?  Makes no sense to me.

Coin Toss's avatarCoin Toss

Not much they can do with the numbers games unless they reduce the payouts.

I'm thinking maybe they are really going to get tight with the scratchers.

Ironic kind of, Quinn (Gov.) insisted on letting Northstar run the lottery. Let's say the lottery itself was the jackpot, the state running it every year was the annuity, and Northstar was the 'cash option'.

The players should always take the cash and the state should stick with the annuity!

KY Floyd's avatarKY Floyd

Quote: Originally posted by zinniagirl on Aug 2, 2012

Wonder if they will blame it on the increase in PB prices?   Or will they be man enough to say, we inflated our projected profits to get your contract?

They can try to blame it on PB prices, but that's not going to be a very good strategy, since overall sales are up. There were 3 jackpots that weren't fully funded yet, but the actual loss of profit to Illinois was only a tiny fraction of the $100 million difference. That minor reduction in profit was probably offset by increased profit from the higher sales.

The real question is the details of what they "promised", whether or not the state changed anything that affected the profit, and the details of the overall agreement.

KY Floyd's avatarKY Floyd

Quote: Originally posted by Littleoldlady on Aug 3, 2012

If they are short about 100 million, how can the possible penalties be hundreds of millions?  Makes no sense to me.

It's because they're paying penalties for not delivering what they promised, not just making good on the promises. The company agreed to those penalties, so they've got to make good on the penalties instead of just the profit they didn't generate.

mcginnin56

Quote: Originally posted by KY Floyd on Aug 5, 2012

It's because they're paying penalties for not delivering what they promised, not just making good on the promises. The company agreed to those penalties, so they've got to make good on the penalties instead of just the profit they didn't generate.

I Agree!

End of comments
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