orthstar is a joint venture between Scientific Games and Gtech Corporation, a subsidiary of Lottomatica Group, which have more than 50 years of combined experience as vendors in Illinois. Scientific Games will have a 20% equity interest in the joint venture.
As the private manager, Northstar, subject to the Illinois Lottery's oversight, will manage the day-to-day operations of the Lottery and its core functions including, among other things: lottery game development and portfolio management; retailer recruitment and training; call center operations; supply of goods and services; subcontractor and vendor selection and management; advertising; branding; and overall marketing strategy. Northstar's goal is to drive Illinois Lottery sales from us$ 2.2 billion in 2010 to over us$ 4.5 billion in 2016, while maintaining responsible gaming best practices.
Scientific Games will be responsible for the design, development, manufacturing, warehousing and distribution of instant lottery tickets and will be compensated based on a percentage of retail sales. Scientific Games will also be entitled to its pro rata share of Northstar's earnings. Under the terms of the private management agreement, Northstar will receive annual incentive compensation payments to the extent it is successful in increasing the Illinois Lottery's net income above certain target levels, subject to a cap of 5% of the applicable year's net income.
Northstar will be responsible for payments to the State of Illinois to the extent such targets are not achieved, subject to a similar cap. Northstar is expected to be reimbursed for most of its operating expenses under the arrangement. For further information about the net income target levels and the Illinois Lottery Private Management Agreement, please visit http://www.illinoislottery.com/subsections/Management.htm
"This award is the first of its kind in the U.S. and, as a member of the Northstar Lottery Group, we are proud to be a part of the Illinois Lottery's progressive efforts," stated Lorne Weil, Chairman and Chief Executive Officer of Scientific Games. "This contract represents a revolutionary new business model and has the potential to transform our industry. We believe there is a tremendous opportunity to responsibly drive long-term sustainable growth and greater returns for good causes in Illinois. We applaud the Illinois Lottery for allowing us the opportunity to prove to policy makers across the country how this strategy can unlock the significant potential of the lottery."
"We look forward to working with Northstar to assist in the management and operation of the Illinois Lottery," said Jodie Winnett, Illinois Lottery Acting Superintendent. "They have laid out a superior business plan that generates the most significant incremental value for the Lottery, and also maintains the highest levels of integrity and responsibility in all operational processes."