New Jersey Lottery Group Contract Challenged

Posted on: April 27, 2013, 05:30h. 

Last updated on: April 26, 2013, 05:15h.

A group of Democratic legislators are in the process of challenging a new contract won by the newly-formed Northstar New Jersey Lottery Group joint venture, which will see the firm provide marketing and sales services to the New Jersey Lottery.

The joint venture brings together American lottery technology provider Scientific Games Corporation and CTECH Corporation, partnering them with OSI LTT NJ Holdings Incorporated, to become Northstar New Jersey.

Northstar New Jersey struck the deal and were awarded the contract recently, and were given the opportunity by New Jersey Governor Chris Christie to offer the New Jersey Lottery a host of services aimed at strengthening the marketing and sales facilities of the operation through to the end of June 2029.

Challenging Legal Issues

However, a letter has been written to United States Attorney General Eric Holder by six members of the New Jersey House of Representatives requesting that the most senior law enforcement official in the U.S. carry out a review of the new deal, stating it is required “in order to avoid costly legal challenges should it be deemed unlawful in the future”.

The letter also urged that action be taken quickly, and that the investigation commence as soon as possible before the contract is officially signed by Northstar New Jersey and the deal is set.

Big Promises Made

Northstar New Jersey spent $120 million up front for the deal , along with the promise of increased profits to $1.42 billion minimum over the term of the contract. Though quite how a promise like that could be guaranteed is the epitome of uncertainty.

However, should the joint venture meet, or even exceed, the terms of the contract, then Northstar New Jersey will find themselves with a maximum of five percent of the revenues from the New Jersey Lottery.

The six legislators, Rush Holt, Albjo Sires, Donald Payne, Rob Andrews, Bill Pascrell and Frank Pallone, cited concerns that the upfront payment of $120 million goes against a previous opinion of the Justice Department.

“This opinion explicitly stated that, in order to prevent corruption or the appearance of corruption, a state should not receive any upfront payment from a private lottery manager,” the letter from the legislators stated.

With this in mind, one would certainly have cause to investigate this new joint venture and its agreement with Chris Christie, as going against a DoJ opinion is possibly asking for trouble down the line.