Governor and all-around-terrible-person Chris Christie was able to privatize the state’s lottery services a couple of years ago. The contract went to Northstar New Jersey, which was able to spread around some cash to the right people at a time when Governor Chris Christie needed some “upfront” money to close his state’s budget woes. You’ve all seen Wall Street by Oliver Stone, I’m guessing? Same thing, essentially.
Higher costs associated with the private company that Christie hired, Northstar New Jersey, have cut the state's income for the second straight year, creating a $136 million shortfall in the state's 2015 budget, according to internal documents obtained by The Associated Press.
The results are poor enough that the state is entitled to fire the company if its performance doesn't improve in the current fiscal year.
Now, New Jersey’s elected officials want to know—what’s going on? Because, for your information, lottery sales are up in the state.
Despite enjoying record sales worth over $3 billion during the state’s last fiscal year, officials from the New Jersey Lottery confirmed during a legislative hearing yesterday that the windfall didn’t translate into a boost in funding for state social programs that by law must benefit from the agency’s proceeds.
Instead, lottery officials and outside vendor Northstar New Jersey blamed a decline in the popularity of multistate jackpot games like Powerball and Mega Millions that carry a higher profit margin, forcing the state to ramp up sales of other, less-profitable games to try to keep pace.
Unfortunately, lawmakers aren’t willing to end the contract yet—even though it is beginning to become as obvious as when the idea was first proposed that this is a bad deal for New Jersey.
But Senate Budget Committee Chairman Paul Sarlo (D-Bergen) said he’s concerned about expenses tied to the 15-year Northstar deal. The contract allows the company to collect fees and reimbursements from the state, payments that could ultimately outstrip any of the gains the lottery system will see from the modernization of marketing and sales, he said.
“If their administrative costs keep creeping year in, year out, what are we gaining? Now we’re paying for their administrative costs,” Sarlo said.
Those questions were being asked to Carole Hedinger, the executive director of the lottery system in New Jersey. Hedinger’s response was what you’d expect—some games (i.e. Powerball and SuperLotto) have large profit margins, while others (scratch off games) do not. The costs Sarlo is referring to, like privatizing the lotto, are historic—Assemblyman Gary Schaer (D-Passaic):
Schaer said Northstar charged the state $29 million in fees and expenses last year, for a total of $45 million in administrative costs, the highest since at least 2008, which diminished profits.
[Emphasis is me calling my doctor to get my blood-pressure checked.)
But, luckily, it was not only Northstar’s lackey, Hedinger, who was to speak today. Seth Hahn, the legislative and political director for Communications Workers of America-New Jersey had a few things to say about the privately run lottery system. Things like, remember history and facts.
Hahn also said instead of shortfalls the lottery system would be enjoying revenue growth, based on the trends from the 2007 to 2012 fiscal years, had the 64 workers from his union who lost their jobs to the Northstar takeover been kept on.
“By any measure, New Jersey had one of the most efficiently run lotteries, if not the most efficiently run lottery in the country,” Hahn said.
Unfortunately, as with most of these privatization scams in our country, they work incredibly well because there is no oversight whatsoever, or very little until the shit hits the fan and everyone wonders where the money went.