Lawsuit alleges Illinois lottery contractor cheated players, vendors

Source: Jeremy Kohler, St. Louis Post-Dispatch, March 13, 2017

A company hired to manage the Illinois Lottery cheated players and lottery vendors by misrepresenting the odds of winning scratch-off games, a class-action lawsuit in federal court alleges. The case, originally filed last month in St. Clair County Court, was removed last week to federal court in the Southern District of Illinois. … Northstar Lottery Group LLC took over the state lottery in 2011 after then-Gov. Pat Quinn agreed to privatize it. The suit alleges that Northstar printed far more scratch-off tickets than it intended to sell, then would discontinue games before grand prizes were awarded, locking in profits. The allegations in the lawsuit mirror the findings of an investigation by the Chicago Tribune, which reported that the state’s biggest scratch-off games didn’t award 40 percent of the grand prizes. …

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Illinois seeking new private manager for state’s lottery
Source: Sophia Tareen, State Journal-Register, July 28, 2016

Aiming to avoid past troubles, Gov. Bruce Rauner announced Thursday that the state is seeking bids for a new private manager to run the Illinois Lottery after moving to terminate Northstar Lottery Group’s contract last year. State officials released a request for proposal on a new 10-year, $300 million contract with revamped terms geared at a wider swath of companies. … Lottery officials said it took nearly a year to start the search for a new manager because of complexities in crafting the contract. New terms include a push to expand technology, paying up-front licensing fees, complying with the Freedom of Information Act and not allowing the private manager to act as both a manager and supplier. Northstar won’t be able to bid, under the termination agreement. Lottery proceeds go to public schools and capital projects. Privatization, with the state retaining ownership and regulatory oversight, was pushed by state legislators as a way to help boost revenues. However, the 2010 selection process for a 10-year contract raised questions about transparency. Northstar was made up of two lottery vendors running machines and instant tickets. … Northstar will continue running the lottery until January 2017, but state lottery officials said that could be extended if the new company isn’t in place. …

Gov. fires private manager of Illinois Lottery amid mismanagement
Source: Natalie Craig, Columbia Chronicle, August 15, 2014

In the wake of Gov. Pat Quinn’s firing of the private firm operating the Illinois lottery, further evidence has come to light that the state’s choice of the company, Northstar, was out of compliance with Illinois law in the first place. An investigation over the past several months by The Chronicle has shown that since the privatization of the Illinois Lottery in 2011, Northstar has failed to produce projected profits and has not held required Lottery Control Board meetings since assuming control of the state lottery’s daily operations.


Lottery firm again falls short of promised revenue
Source: Matthew Walberg, Chicago Tribune, June 3, 2014

The private firm managing the Illinois Lottery could fall short of promised revenues for the third straight year, prompting calls to re-evaluate the state’s relationship with the company. Northstar Lottery Group is on pace to wind up more than $200 million off target for the fiscal year ending in June, prompting concern among officials who oversee the lottery as well as lawmakers such as state Senate President John Cullerton, D-Chicago, one of the chief architects of the move toward private management….

Odds favor more strife for Illinois Lottery
Source: Paul Merrion, Crain’s Chicago Business, July 22, 2013

Don’t bet on the quick payoff that private management was supposed to bring the Illinois Lottery. Like an experiment with too many variables, it’s impossible to determine whether the consortium hired to run the lottery in 2011 overpromised, underdelivered or ran into too much interference from the state, which for better or worse has played a bigger role in the lottery’s marketing and day-to-day management than both sides anticipated. And the power struggle between the state and Northstar Lottery Group LLC continues, dampening prospects for a turnaround this year. …Despite record sales of $2.8 billion, the return of $793.5 million to the state was far below Northstar’s $947.1 million profit target in the fiscal year ended last month. Online ticket sales, which were supposed to add nearly $34 million in profits last year, have been a near-total bust, with sales of only $6.5 million. The state ordered Northstar to completely revamp its original website for online sales. …

Illinois lost millions on lottery privatization, lawmaker says
Source: Benjamin Yount, Illinois Watchdog, March 18, 2013

The Illinois lottery, one lawmaker says, has filled the state with losers. State Rep. Jack Franks, D-Marengo, says a $20 million fine for Illinois’ private lottery manager, Northstar Lottery Group, amounts to pennies when compared to what the state gave away. “We’re still not getting the kind of return that we could have if we would have just kept this in-house,” Franks said Monday. Franks has been critical of the 2010 deal that allowed Northstar to take over Illinois’ lottery. Northstar promised to sell $851 million in tickets in 2012, but instead sold $757 million in tickets. The company will pay the state $20 million for falling short.

Private firm running Illinois Lottery fined $20 million for falling short on sales
Source: Monique Garcia, Chicago Tribune, Clout Street blog, March 18, 2013

Illinois Lottery private manager short on profits
Source: Regina Garcia Cano, Associated Press, March 18, 2013