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Struggling Illinois Lottery closer to getting new manager

Illinois is ready to unveil the firm it hopes can boost the fortunes of its biggest moneymaking venture — the state lottery — nearly three years after the state began pushing out the firm that has run the games for years.

The Illinois Lottery announced Friday that it will hold a public hearing Aug. 14 to showcase plans by the new firm that could take over managing a lottery that has struggled in recent years with sluggish sales and controversy surrounding how its run games.

A series of Tribune investigations over the past year reported how the lottery, under private management, collected hundreds of millions of dollars from selling tickets to instant games in which it did not hand out all of the life-changing grand prizes — sometimes awarding no grand prizes before ending a game.

The company that manages the lottery, Northstar Lottery Group, maintained it ran the games fairly and in the best interest of players and the state. But the findings prompted two class-action lawsuits alleging players were defrauded.

Those revelations came amid tepid financial returns in recent years and at times caustic finger-pointing between the private manager and state officials over why. Along the way, years of state budget gridlock forced the lottery to delay paying some big winners and even briefly suspend selling some popular games, leading to more frustration among players.

In a statement Friday, the state indicated it hopes to turn a corner.

"The state endeavors to select a new private manager that shares the Lottery's goals of increasing profits to the state, responsibly broadening its player base, introducing new technology and innovation, ensuring responsiveness to public needs and concerns, and eliminating conflicts of interest," according to the statement.

The firm that could take over the lottery, Camelot, was the second-place finisher when Illinois became the first state in the nation to privatize its lottery in a process later ripped by state auditors.

In July 2011, Illinois let two longtime lottery vendors form a firm that got a 10-year management deal. That management firm, Northstar, in turn awarded lucrative, no-bid subcontracts to the longtime vendors that formed it. The Tribune also found the firm pledged taxpayer money to pay for its own "advisory board" stocked with politically connected Illinoisans who answered solely to Northstar.

As Northstar struggled to make the lofty revenue projections it pitched in its bid, disputes arose over who was to blame and how much in penalties Northstar should pay. The Quinn administration announced three years ago it planned to fire Nothstar, but a deal fell through, with the incoming Rauner administration inking another deal with Northstar in September 2015 that called for Northstar to leave as early as Jan. 1, 2017.

But that date came and passed as the state struggled to manage a complicated process to solicit and vet bidders for an unusual arrangement that carried massive financial implications for both the state and whichever firm got the gig. Only one bidder emerged — Camelot — known mostly for running Great Britain's lottery.

Lawmakers began complaining about how there was only one bidder and it was taking too long for the state to oust Northstar. That followed Tribune reporting about Northstar making more money than ever thanks to lucrative incentives it received to stick around until a replacement came in — including taxpayer-funded bonuses for Northstar employees who kept working.

While the state described the hearing as a significant step in the switch, it's unclear how long it will take to replace Northstar. The state said that, even if the hearing goes well, it still must finalize the contract language with Camelot and then give people time to appeal the decision.


©2017 the Chicago Tribune

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