At a recent press conference in Chicago, Rep. Governor Bruce Rauner told reporters that a request for proposal for a new private manager for the Illinois State Lottery has been released by the state for a 10-year contract estimated to be worth at least $300 million, according to the Associated Press.
In September last year, Gov. Rauner’s administration announced that it had reached a termination agreement with the nation’s first private firm to manage a state lottery. The agreement effectively removes Northstar Lottery Group from its duties as the Lottery’s private manager as of January 1, 2017, or until such time as a replacement is chosen. The new contract includes terms aimed at attracting a broader range of companies.
The termination deal, which Rauner’s administration said immediately saved the state‘s taxpayers an estimated $22 million, also stipulated that the successor to the Chicago-based company will be free to choose its own suppliers. A prior settlement agreement wrangled by then Gov. Pat Quinn, who hired Northstar in 2010, would have reportedly forced a new management company to use GTECH and Scientific Games, Northstar’s parent companies, according to the Chicago Tribune. However, Illinois Attorney General Lisa Madigan blocked the settlement. The terms of the new contract also include paying up-front licensing fees, an effort to expand technology, and in accordance with the Freedom of Information Act, not permitting the new private manager to serve as both manager and supplier. Under the termination agreement, Northstar is prohibited from bidding.
Shortly after taking control of lottery operations in July 2011, Northstar, which had promised to significantly boost the state agency’s lackluster revenues, began requesting a reduction in its lofty revenue targets. Shortfalls over the next few years of what it promised to bring to the state’s coffers, served as a catalyst for Quinn’s decision in 2014 to fire the company.
At the news conference in Chicago on July 28, Rauner said, “Our Illinois Lottery has been very poorly run and failed to meet expectations for years,” according to the news agency. Due to the complex nature of the new contract, it took almost a year before the search for a new manager began, according to lottery officials. The governor said it would take approximately six months for a new manager to be hired following acting in accordance with the process set in state law. However, Rauner said that if a suitable successor can’t be found through the bidding process, he would consider changing the management model. The governor made mention of a “public benefit corporation” similar to lottery operations in Georgia and Tennessee. The legislature would need to approve any changes.