By Chief Political Correspondent Michael Aron
At an Assembly hearing on his department’s budget, state Treasurer Andrew Sidamon-Eristoff offered a spirited defense of the Christie administration’s lottery privatization plan.
It’s a management services agreement, Eristoff said, with two industry leaders and it’s necessary to keep up with the times.
“The market is changing, lotteries are maturing, globally we’re seeing growth come down and we’d see the demographics, frankly shifting against lotteries and traditional lottery players,” Eristoff said. “And we know that if we’re going to have any expectation of being able to continue to rely on these resources, we need to do something now in order to protect these resources going forward.”
The lottery generates about $1 billion a year, making it the state’s fourth largest revenue source.
Under the new contract, a private firm will take over the sales and marketing and pay the state $120 million up front for the privilege.
Democratic gubernatorial candidate Barbara Buono says it makes no sense to change something that’s working well.
“Why we would privatize that component of it is beyond me. It could be only for one reason and one reason alone. And that is the private company is gonna give this governor $120 million one time upfront payment that will plug a sinking budget that is structurally deficient,” Buono said.
On Monday the union representing lottery workers held a protest. Sixty are slated to lose their jobs in the transition.
Eristoff said the new company will invite them to apply, or other options exist.
“We have a big state government of 66,000 employees, and surely we can find something productive for them to do,” Eristoff said.
The lottery issue has divided the two parties in Trenton.
“I think this is a way to bring the lottery into the 21st century. It’s a management contract. The lottery, I think, is only going to improve with new ideas and new incentives brought in,” Assemblyman Jay Webber said.
“I think he’s right on that, and I think we have to do it. But why couldn’t we do it in-house? You at least try it first. If you can successfully do it in-house, it’s always better because when you bring somebody from the outside, they’re looking to make money, so we’re not getting the full bang for our buck,” Assemblyman Vincent Prieto said.
The governor and his treasurer say this is a good deal for the state — one they can get out of if the joint venture between GTECH, Scientific Games and a Canadian pension fund does not perform. Democrats say it might be illegal to accept upfront money from a lottery operator — and why are we even bothering?