CHICAGO - Crain's Chicago is reporting that the state is making public its decision to dump Northstar as its private Illinois Lottery manager after three years of Northstar failing to meet its promised goals.
Shortly after the partnership began, reports started emerging in that State Lottery Director Michael Jones was undermining the deal by complaining to other state lottery officials about Northstar.
Jones dismissed those charges and countered accusations Northstar fed to Chicago media about him.
After it was reported that Illinois' lottery privatization company Northstar's first year fell $55 million short of its promised $825 million profit promise, Jones was quoted in the Indianapolis Star as saying, "Illinois is not something to emulate," he said. "It's something to learn from."
In a January 2013 interview with Illinois Review, Jones said some of Illinois' privatization requirements were faulty because they disqualified all except for the biggest managerial companies.
First, the managerial company would need to put up $20 million in cash or credit line, preventing smaller companies from competing for the project.
Second, Illinois is required to pay for the private company's operating costs, causing the state to risk its own capital.
Third, the length of the state lottery contract is 15 years, setting up an potential adversarial relationship if the managerial company underperforms, Jones said. He said the state should be allowed to fire an underperforming company.
But, reports that claimed Jones was traveling to conferences and publicly criticizing Illinois privatization agreement were "completely untrue," he told Illinois Review.
Northstar didn't take Jones' criticism sitting down. They began an effort to dispute Jones' comments and said that Jones tried to get a job with Northstar before becoming the state's lottery director.
Illinois is one of the nation's first states to try privatizing lottery management. The state has not revealed how it intends to progress in finding another manager, or whether they will end the privatization experiment.
Other Illinois Review stories on the topic include: