New Jersey's six Democratic members of the House of Representatives are asking the Justice Department to review whether the state's plan to hire a private consortium to manage New Jersey Lottery sales and marketing is legal.
Today's letter to Attorney General Eric Holder -- which is signed by U.S. Reps. Rob Andrews, Rush Holt, Frank Pallone Jr., Bill Pascrell Jr., Donald Payne Jr. and Albio Sires -- focuses in part on the $120 million that Northstar New Jersey Lottery Group would pay the state, most likely by June 30, which the state has described as an advance against future revenues to be generated under the 15-year contract.
“It is very troubling that there are still so many questions surrounding this proposal,” Payne said. “The DOJ’s review will provide some much needed answers for the people of New Jersey who are concerned about the integrity of a lottery that generates more than $2.6 billion in revenue for the state, which could be compromised under this new proposal. We are looking out for the people of New Jersey by asking for a simple review to ensure the State is doing its proper due diligence.”
Here are excerpts from the letter:
“[The] DOJ issued an opinion in 2008 setting forth the narrow circumstances under which a state may enter into an arrangement with a private company to manage its lottery operations," says the letter. "This opinion explicitly stated that, in order to prevent corruption or the appearance of corruption, a state should not receive any upfront payment from a private lottery manager. Since it was issued, this guidance has been expressly followed by the only two states that have entered into private lottery management agreements, Illinois and Indiana.
“As you may know, New Jersey recently announced its intent to award the contract in response to a single bid to privatize sales and marketing of the New Jersey Lottery. The State’s Request for Proposal (RFP) requires a $120 million upfront payment from the prospective private lottery manager at the outset of the contract. Some have alleged that this arrangement appears to fall short of the test for compliance with the Department’s interpretation of the law. We ask you to provide guidance on the legality of this arrangement in order to avoid costly legal challenges should it be deemed unlawful in the future.”
The state Department of the Treasury last Friday announced its intent to award the lottery management contract to the only group that bid for the work, a consortium that consists of GTECH Corp., Scientific Games and a Canadian pension fund.
The Communications Workers of America union has said it will try to block the contract. Groups have until next week to file formal protests with the Treasury Department.
