Christie’s Secret Plan to Sell the New Jersey State Lottery and Destroy Small Business

Hetty is NJ director of CWA. Promoted by Rosi

In a few days “bids” will be due on a secret plan to sell the New Jersey Lottery. It isn’t being called a sale or “monetization” as Corzine called it, but that’s what it is.  It’s being hidden under the cloak of privatization of sales and management.

I’ll get to the details in a second.  This is a bad deal and the fix may be in.  But we are building public support to defeat the plan.  For starters, you can head on over to Sign our petition to tell the governor we need to stop this deal to prevent fraud and harm to locally-owned small businesses.  Follow our campaign on twitter, @BigGambleNJ. And most importantly, call the governor and your legislators and demand that they do everything they can to put a stop to this.

Here’s what the Governor is doing. The winning bidder will pay the State $120 million to buy I mean to “manage” lottery sales.  The State will get its legally required cut of lottery sales, which means that the contractor has to expand sales and cut corners in order to make its profit.  

All the experienced State Lottery workers will be laid off, and the contractor will handle lottery sales.  In order to expand the sales they will favor Big Box stores and chains and online lottery sales so that they don’t have to go out and visit tiny newsstands and gas stations.  They can charge fees for lottery machines and to fix the machines. Governor Christie estimates that the winning bidder will make $1 billion.  

This will have a devastating impact on small and local businesses throughout New Jersey that depend on lottery sales.  If people buy lottery tickets from Walmart instead of their town newspaper store, they also don’t buy gum, cigarettes, coffee and a snack for the road from their local store.  The deal is a business killer.

There’s also evidence the skids are being greased to sell the lottery operations to GTECH, a company which has a very clear record of graft, fraud, and abuse from Brazil to Rhode Island.  GTECH’s national sales manager went to jail for five years for conspiring with a New Jersey political firm in connection to a $750,000 laundering and kick-back scheme in the 1990s.  Illinois is the only other state to have privatized its lottery functions so far, and it is run by a subsidiary of GTECH’s called the Northstar Lottery Group.  How are we doing in Illinois?  Taxpayers there are currently in a legal process with the state of Illinois for failing to meet its revenue goals by nearly $150 million in 2012, and the company already says they’re going to miss revenue estimates by $120 million over the next four years.  Talking about the shortfall in Illinois-a quarter of a billion dollars over the first five years alone-the GTECH spokesman shrugged if off, saying “That’s the nature of pilot programs.”  You can guess who’s on the hook for that lost revenue, and make your own mind up about whether you’d like this “pilot program” here in New Jersey.

There’s more.  Right now, public employee lottery workers don’t know which lottery tickets go where.  They can’t control and have no incentive to steer winning tickets one way of the other.  But a private lottery vendor (especially G-TECH that already delivers the New Jersey Lottery tickets) has a lot of incentive to send winning tickets to places that it wants to increase sales because they get a bigger cut or the servicing costs less.

The up-front cash infusion to the state of $120 million that the deal requires is just the type of revenue gimmick you need if you’re a Governor making the case for a tax cut that everyone knows we can’t afford.  The proposal calls for slashing worker pay and eliminating public worker jobs, there are no standards to protect services or stop cronyism and political graft and it kills small business.  

Comments (2)

  1. firstamend07

    The Governor has been very open about privatizing not only this area but other areas of State government.

    But why such late notice on this fight ?

    Anti-privatization Bills have been brought up in the Legislature that will help stop these giveaways in both the Lottery area and in the Corrections Department. However membership mobilization has been virtually nonexistent. Political pressure has not been used .

    Posting on Blue Jersey is a good step,but why have the 60,000 members of CWA not been notified directly and asked to fight this and other privatization efforts?  

  2. deciminyan

    There are a lot of unanswered questions that come up. For example, the lottery requires an Information Technology infrastructure to manage the numbers, data, and finances of the lottery. Will a private buyer move those jobs outside of New Jersey? What is the added annual cost to the state to provide oversight to ensure the private contractor is in compliance with the terms and conditions of the contract? What is the hidden cost to the state of the unemployment benefits and lost tax revenue for those state employees who are laid off or are forced to take lower-paying jobs?

    This “initiative” sounds like a bad idea, and probably is. More transparency is needed immediately. Didn’t we learn anything from the halfway house fiasco?


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