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NJ Lottery officials still investigating cause of massive outage

Aug 20, 2015, 8:27 pm

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New Jersey Lottery

The exact cause and circumstances of a five-day outage that blocked nearly half of New Jersey's lottery retailers from selling printed tickets like Pick 3 and Mega Millions earlier this month are still a mystery, but a few determinations are unanimous.

The blackout, although anomalous, was unacceptable, may have been detected sooner and should have been handled better, state officials and executives from Northstar New Jersey, the group responsible for the lottery's sales and marketing, said at a meeting Thursday.

"It's very clear that this incident did not meet the expectations that any of us have for the partnership that Northstar and IGT have with New Jersey Lottery, and IGT takes full responsibility for what's happened. There's no excuse for it," said Tim Simonson, senior vice president of lottery management services at International Game Technology, or IGT, one of the three organizations that make up Northstar.

An investigation into the outage is ongoing, but officials traced it to an upgrade over the Aug. 2 weekend to the retail network's printer system. The lottery was set to introduce a new set of games that Sunday, called Fast Play, which are printed tickets about 8 inches long. The lottery's other printed games — called draw games — are about 3 inches long and have smaller fonts. Printing the new tickets required an upgrade to the printer system linked to the state's 7,220 retailers.

Although the lottery and International Game Technology tested the new software to replicate the live system with "no problems" that Friday night, about 200 retailers called the lottery's help desk on Saturday to report problems, executive director Carole Hedinger said. That many calls is not an unusual number and officials did not assume a widespread problem, she said. Then about 500 calls came in on Sunday, and officials realized it was more severe than originally thought.

Hedinger said 43 percent of the state's retailers, or about 3,100, were unable to print tickets. By Monday engineers got it down to 12 percent, and by Wednesday the whole network was back up.

Hedinger did not notify the rest of the commission of the issues until that Monday. She called "the communication process very poor, and I take most of the blame for that on our side." She also noted the lapse in identifying the extent of the problem sooner.

But the bottom line was spared. Hedinger said sales for that weekend were "higher than the week before, even when you take out the new game," but she did not provide figures.

"Sales did not appear to suffer," she said, adding, "If we got lucky, we were lucky it happened on a slow day instead of a busy day."

Hedinger and Northstar officials at the meeting all said that they had never seen a glitch of this kind.

The outage adds to the struggles Northstar has had since taking over the lottery's essential functions two years ago. The group — comprised of International Game Technology, formerly GTECH; Scientific Games; and the Ontario Municipal Employees Retirement System — has missed its income projections the first two years of the contract and slashed its outlook for the third, which started last month.

Facing criticism of those shortfalls, which mean less money back to the state than budgeted, state officials have pointed to a brisk expansion of retailers and a significant investment in technology as other notable achievements. But the outage and response to it disappointed acting state treasurer Robert A. Romano, who called a meeting of lottery officials after the incident, a treasury official said.

"He expressed his surprise at the extraordinary breakdown, particularly given what we all thought and had seen as an extremely robust system of checks and protocols. He was frustrated by the lack of timely and accurate communication about the extent of the problem, and his opinion, at least at the time of the meeting, was that the remediation effort had been too slow and inadequate," said Roger Cohen, Romano's liaison to the lottery panel. "The treasurer does expect that appropriate measures will be taken to make sure that this problem doesn't repeat, that service is not interrupted again, that public confidence is restored and, of course, the integrity of the games is always maintained."

Northstar officials assured the commission that steps were taken to identify any future issues sooner and said it would not happen again. The 15-year contract includes provisions for the state to be repaid for any losses, but no determination on that will be made until the investigation is complete.

Later in the meeting, the commission unanimously approved a redesign of the draw game Powerball, whose lagging sales have contributed to Northstar's income shortfalls.

The new game will increase the sizes of the jackpots, but also the odds of winning them, from one-in-175 million to one-in-292 million. Although it will be harder to hit the big jackpots, the odds of winning other prizes will get better. Those non-jackpot prizes will also increase, most notable Powerball's third prize, which will increase five-fold, from $10,000 to $50,0000.

The new Powerball begins Oct. 7.

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