Lottomatica Group Announces that a Joint Venture Led By GTECH Corporation Has Been Selected to Provide Marketing and Sales Services to the New Jersey Lottery
ROME, ITALY and PROVIDENCE, RHODE ISLAND (US) – April 13, 2013 – Lottomatica Group S.p.A. announces that the New Jersey Treasury Department has issued a notice of intent to award a contract to Northstar New Jersey Lottery Group (“Northstar NJ”) to provide marketing and sales services to the New Jersey Lottery. Northstar NJ is a joint venture comprised of GTECH Corporation, a subsidiary of Lottomatica Group; Scientific Games International, Inc.; and, OSI LTT NJ Holdings Inc., an indirect subsidiary of OMERS Administration Corporation, the administrator of the Ontario Municipal Employees Retirement System pension funds (OMERS). The Services Agreement has a term through June 30, 2029, and is expected to be signed within 60 days. GTECH and OSI will each own approximately 41% of Northstar NJ and a subsidiary of Scientific Games will own approximately 18%.
The Northstar NJ business plan will result in an annual growth rate of 6.07% over the first five years, generating an average of $1.18 billion annually in net income for the State over the five-year period, for an average annual increase of $211 million, and a total gain of more than $1 billion over that period, compared to what the State would have realized based on its own forecasts, if Lottery operations continued unchanged. Northstar NJ is entitled to receive annual incentive payments for annual performance which exceeds certain thresholds as outlined in the Services Agreement, and has given assurances that provide for payments to the State of New Jersey if a minimum, agreed-upon performance level is not achieved. In addition, Northstar NJ is required to make a $120 million payment to the State upon execution of the Services Agreement.
“We are confident that our new role will help the New Jersey Lottery realize its full potential,” said Northstar NJ Chairman and GTECH President & CEO Jaymin B. Patel. “Northstar has developed a comprehensive business plan that extends the New Jersey Lottery’s trusted and successful brand and forward-thinking leadership. We will develop new and effective ways to increase the Lottery’s income and value to the State. With our combined 30 years of experience working with the New Jersey Lottery on previous contracts, Northstar NJ will help the Lottery grow revenue responsibly while strengthening the revenue stream for future contributions to good causes through innovation, technological advances, and community responsibility.”
“We look forward to proving how meaningful a commercial lottery business model can be to the State of New Jersey and its residents,” stated Scientific Games Chairman and Chief Executive Officer A. Lorne Weil. “We have been a long-time partner of the New Jersey Lottery, including launching the industry’s first internet-based second chance drawing in 2001 for the New Jersey Lottery. We are proud to continue to be a part of the Lottery’s progressive efforts in establishing itself as an industry leader in terms of both performance and innovation.”
The senior leadership of Northstar NJ has been identified and is ready to begin the transition to the new operating model immediately.
The Request for Proposals called for a firm that could take over a wide range of marketing, sales, and related functions for the Lottery, subject to its continuing control and oversight over all significant business decisions, focusing on core functions, including lottery game development, supply of related goods and services, and marketing and advertising, among other things. Once the contractual arrangement is fully implemented and Northstar NJ’s business plan is approved by the Lottery, Northstar NJ will be entitled to reimbursement for its operating expenses.