N.J. prepares to bet on privatized lottery

Beth Fitzgerald//September 5, 2012

N.J. prepares to bet on privatized lottery

Beth Fitzgerald//September 5, 2012

State prepares to welcome proposals from private companies to take over management of its lottery, and possibly expand it to the Internet.

Since it was launched in 1970, the New Jersey Lottery has contributed more than $20 billion to education and state institutions, according to the state. 

Potential bidders will attend a mandatory 10 a.m. public “pre-proposal conference” Thursday at Treasury’s Division of Purchase and Property, with Nov. 15 the deadline for bids. 

Among the companies planning to attend Thursday’s meeting is GTECH Corp., which has been supplying lottery technology to New Jersey since 1984.

“We’re following the process with great interest and with the intent of participating,” said GTECH spokesman Robert Vincent. Asked if the Providence, R.I., company will submit a bid to take over the operation of the lottery from the state, he said, “We are looking at it with that intent.”

GTECH is part of a consortium that for the past year has operated the state lottery of Illinois, the first state to privatize its lottery management, Vincent said. GTECH, a subsidiary of Lottomatica, is a lottery technology vendor to 27 states, including New Jersey and New York.

Vincent said currently state workers oversee and manage the New Jersey lottery, while GTECH “provides the fundamental computing, central data systems, communication backbone, central monitoring system, terminals and the like — the technology solutions that make the lottery operate.”

GTECH’s most recent New Jersey lottery contract began in 2009, and GTECH estimated it would receive $105 million in revenue over the seven years of that contract.

Asked if Internet games could spur significant growth for the state’s lottery, Vincent said “it really will depend on the type of games that get offered,” and noted that Internet lotteries are common outside the United States. The Northstar Consortium, which includes GTECH and Scientific Games, concluded its first year of running the Illinois lottery in July. In Illinois, Vincent said, “the Internet lottery has been a pilot, selling some of their more traditional games. It has had some good success, but it has not yet become a major contributor.”

The state’s RFP said the state “is exploring the utilization of the Internet to expand the reach of its lottery offerings, and over time, to create new gaming entertainment experiences.” The outside manager may “have the opportunity to design and implement Internet sales channel for lottery products.”

The state’s RFP requires bidders to provide a plan for recruiting staff, “including the recruitment of existing lottery employees.” According to the RFP, the lottery has 150 employees and sells tickets through about 6,500 retailers statewide, and is now expanding that to 6,700 retailers.