Failed Illinois project costs Scientific Games

The release by Scientific Games this week of its Q3-2014 results (see earlier bulletin) gave industry observers a glimpse of the costs of the failed joint venture Northstar which the company entered into with GTech to run the Illinois State Lottery.

State governor Pat Quinn axed the project last summer, using the failure of the Northstar Lottery Group to deliver on agreed targets as justification and – as the results this week illustrate – creating a $19.7 million loss for Scientific Games, which had a 20 percent interest in the JV.

Illinois lottery officials plan to replace Northstar by next June, re-triggering political debate on the issue that has raged for several years (see previous reports).

The gambling supply company also disclosed that during its third quarter it had paid $8 million for its share of penalties due to Illinois for falling short of revenue targets Northstar contracted to reach four years ago as the first private manager of the state lottery.

Gtech Group will no doubt also reflect the cost of Northstar’s failure when it posts its third quarter results.