Northstar under fire again for Illinois lottery performace

After three years of running the outsourced Illinois state lottery, operating firm Northstar is still catching flak for not meeting its projections for the lottery…and failure to meet targets has resulted in penalties of $60 million being paid to the state, according to Gov. Pat Quinn’s office.

This week state Representative Jack Franks again shone the spotlight on Northstar’s disappointing performance, asking the governor why the company had not been fired.

“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.”

Franks added that 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.

Northstar disagrees with this assessment and says revenue targets were met…but whose targets?

Amid considerable opposition, the company took over the state lottery in 2011 (see previous reports), and it claims that it has brought in record revenues when compared to the days when the state managed the operation.

That may be, but the problem is that Northstar has not come anywhere close to providing the revenue it predicted when pitching for the contract.

And it receives $100 million a year in terms of the deal with the state.

Opponents of the out-sourcing renewed criticism in March this year when Northstar revealed that it was likely to post lower revenues than promised for the third consecutive year. 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.

The governor’s office told reporters this week that the Northstar situation was being closely monitored, with the interests of taxpayers a priority at all times.

However, a spokesperson said that Franks’ criticism was unfounded. Northstar has paid almost $60 million in penalties to the state for failing to meet its promised financial targets, she said, adding:

“Northstar has succeeded in growing revenues for the State and has built a strong foundation for even greater success in the future.”