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Unions Oppose Private Company Running NJ Lottery

7-23-14

By Briana Vannozzi
Correspondent

Public worker unions are calling it the latest sweetheart deal under the Christie administration. A 15-year private contract with Northstar Lottery Group to manage sales, marketing and daily operations of New Jersey’s lottery business. Earlier this month a state appeals court blocked a suit by the Communications Workers of America and the AFL-CIO trying to end the deal.

“If there was something wrong here and we’re trying to fix it, maybe, but there was nothing wrong here. Lottery was doing just fine,” said CWA Political Director Seth Hahn.

The CWA said the move breached the state constitution by giving operational duties to a private group. The appellate court rejected that citing provisions in the contract that maintain state power over policy and business decisions as required by the state lottery law. The CWA’s political director disagrees.

“The Christie administration has said this is not privatization, this is a contract where public workers were doing the job that now a private firm is doing the job. And taxpayers are paying the firm to do that job,” Hahn said.

Northstar made a one-time payment of $120 million to the state. In return, they promised to bring home at least $1.5 billion more in revenue over the next 15 years. They’ll keep 5 percent of the increases if they meet their goal. The state says it can cut ties after two years if the firm fails to do so.

Today the Treasury Department said, “No lottery employees were laid off as a result. They either found employment with Northstar or another state agency.”

Any specifics on revenue and sales will have to wait until the lottery’s audited results come out in the fall.

Unions contend Northstar is too politically connected. Their parent company made contributions to the Republican Governors Association which Christie heads and hired a law firm connected to his administration.

“Sales this year are projected to decrease by $10 million over the last year when public workers were running sales and marketing and the company is still gonna make some money off of it,” said Hahn.

The lottery is New Jersey’s fourth largest revenue source. It generates almost $3 billion in ticket sales every year. Nine hundred million dollars is kept by the state to award scholarships and fund programs for the disabled and military veterans.

Today the CWA says it will review the court’s decision and make a decision on legal options shortly.