Illinois Lottery finally reaches exit agreement with Northstar

Revised deal described as an “instant win” for tax payers with new private manager to take over day to day running on 1 January 2017

The Illinois Lottery has finally reached an agreement to terminate its partnership with private operator Northstar almost a year after agreeing to pay $150m in early settlement fees in a deal that was rejected the by the state’s attorney general. [private]

The new deal has been described as an “instant win” for tax payers, with the revised financial settlement already saving them the $22m Northstar would have received at this stage in the previous exit agreement signed off by former Governor Pat Quinn.

Under the revised deal, a new private manager will take over the day to day running of the lottery from 1 January 2017 which will select its own suppliers. The previous agreement would have given Northstar parent companies GTECH (now IGT) and Scientific Games first rights.

“This is a new day for the Illinois Lottery,” acting lottery director B.R. Lane said. “This agreement will save the taxpayers hundreds of millions of dollars while allowing the lottery to select a new partner that will help the agency grow and better serve its customers.”

The lottery first announced plans to dump Northstar back in August last year after claiming it had failed to meet revenues targets for a third consecutive year. A recent legislative report also found that the lottery had lost money this year for the first time since 2009.

While negotiations over the exit deal rumbled on, lottery boss Michael Jones announced he would step down from the role back in March saying his “job was done” and that straightening out the private manager model was “much more difficult” than he had ever imagined.

The Illinois Lottery and Northstar became the first in the US to offer the sale of tickets via the internet, generating $36.9m in revenues from launch to April 2014.