New Jersey goes ahead with lottery privatisation

GTECH announced that Northstar New Jersey Lottery Group has signed a 15-year Services Agreement with the New Jersey Lottery. The term of the Services Agreement will run through June 30, 2029, with transition services commencing immediately, and with full services expected to begin on October 1, 2013.

Northstar NJ is a joint venture in which GTech and Ontario Municipal Employees Retirement System each own about 41 % of the company, with Scientific Games owning about 18 %. The company was the sole bidder for the contract, offering to make an upfront us$ 120 million payment to the state.

The Communications Workers of America trade union has vowed to challenge the Christie administration’s decision to partially privatise the lottery, whilst Democrats in the state legislature and convenience store owners impacted by the decision have also voiced objections.

Under the Services Agreement, Northstar NJ will manage a wide range of the New Jersey Lottery’s marketing, sales and related functions, subject to the Lottery’s continuing control and oversight over all significant business decisions.  Responsible gaming programs will be embedded throughout these operational processes and core functions.

“We are looking forward to our new partnership with Northstar New Jersey,” said New Jersey Lottery Executive Director Carole Hedinger. “The New Jersey Lottery is a top-performing lottery. This partnership will help us achieve even greater success for New Jersey education, institutions, and its citizens.”

“We were able to submit a compelling proposal to New Jersey based upon our operational expertise, innovative technology solutions, and local market knowledge, all of which will drive this Services Agreement,” said Gtech CEO Marco Sala.

“Northstar NJhas developed a comprehensivebusiness plan to generate approximately $1 billion of additional net income for the State of New Jersey over the first five years of the base Services Agreement commencing July 1, 2014,”said Chairman of Northstar NJ and President & CEO of GTECH Americas Jaymin B. Patel. “We are deeply committed to working even more closely with the New Jersey Lottery in the future to achieve even greater success, building upon their outstanding track record of efficiency and revenueresults. We are confident we will be able to deliver on our commitments and fulfill the State’s objectives through a management team with deep New Jersey and global lottery-industry experience, and an overall business plan to drive value forthe State of New Jersey and its citizens.”

“We look forward to working with the New Jersey Lottery, with whom we have a good working relationship, to responsibly grow lottery revenue for the State," stated Chairman and CEO of Scientific Games A. Lorne Weil. "We applaud the Lottery for their innovative business model which will bring in significant resources in terms of capital, talent and entertaining products, to help establish the New Jersey Lottery as an industry leader in terms of both performance and innovation.”

Senior leadership for Northstar NJ has been identified and is ready to begin the transition to the new Marketing and Services model immediately. Northstar NJ will be reimbursed monthly for certain manager expenses, including personnel costs and other overhead expenses. Certain costs, which include fees to subcontractors, including GTECH and Scientific Games, will also be reimbursed to Northstar NJ by the State.