May 15, 2014, 12:13 pm
Northstar disagrees, says revenue targets met
Citing nearly three years of lackluster performance, an Illinois state lawmaker is urging Governor Pat Quinn to fire the company his administration hired to run the Illinois Lottery.
State Rep. Jack Franks, D-Marengo, said the state's contract with Northstar Lottery Group has cost taxpayers hundreds of millions in lost revenues due to the firm's failure to meet revenue goals.
"The privatization of the Illinois State Lottery has been nothing less than a disaster" for taxpayers, Franks said at a press conference Wednesday at the state capitol. "(It) is time for the Illinois State Lottery and Northstar to go their separate ways, and for this to happen, Governor Quinn needs to step up and lead."
Northstar took over the lottery in 2011 and has defended its performance, pointing out that it has brought in record revenues compared to the lottery's record when the state managed the operation. Nonetheless, the company has not come close to providing the revenue it promised in its winning bid for the contract.
In March, Lottery officials said Northstar was on track to post lower revenues than promised for the third straight year unless it doubled weekly sales for the remainder of the fiscal year ending June 30. The firm is expected to fall more than $440 million short of what it promised the state over the first three years of the contract.
Meanwhile, Northstar and its parent companies have been paid approximately $100 million a year to manage and provide products for the lottery, Franks said.
Franks said the governor should do all he can to ensure better production from the lottery before he asks for tax hikes. "The governor needs to stand with the people on this issue, not with a bad decision he made three years ago," he said.
A spokesperson for Quinn said his office was "closely monitoring the situation" and expects both Northstar and the lottery to follow the contract "in good faith and to protect taxpayers at all times."
Northstar spokeswoman Avis LaVelle said Franks' criticism is unfounded and that the firm's success in Illinois has led other states to hire private companies to manage their lotteries.
The company, she said, also has paid almost $60 million in financial penalties to the state for failing to meet revenue targets.
"As a result, the state has received every dollar (it was) guaranteed," she said in a written statement. "Northstar has succeeded in growing revenues for the State and has built a strong foundation for even greater success in the future."
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