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US – New Jersey Lottery Group takes Scientific approach

By - 26 June 2013

Northstar New Jersey Lottery Group has signed a long-term agreement with Scientific Games who will provide marketing, sales and other services to the New Jersey Lottery. 

Services under the agreement are expected to begin on October 1, 2013following a transition period and end on June 30, 2029.  Northstar NJ is a joint venture comprised of Scientific Games New Jersey, GTECH Corporation and OSI LTT NJ Grantor Trust, an affiliated entity of OMERS Administration Corporation, the administrator of the Ontario Municipal Employees Retirement System pension funds.

Northstar NJ will provide a wide range of specialised services to the Lottery that will focus on strengthening its marketing and sales functions and will include support for lottery game development, marketing and advertising, as well as the procurement of related goods and services. All of these activities will be subject to control and oversight by the Lottery.

Under the terms of the agreement, Northstar NJ will be entitled to receive annual incentive compensation to the extent the Lottery’s net income for the applicable year exceeds specified target levels, subject to a cap of five per cent of such net income.  Northstar NJ will be responsible for payments to the State to the extent the Lottery net income targets set forth in Northstar NJ’s successful bid are not achieved, subject to a cap of two per cent of the applicable year’s net income and a $20m shortfall payment credit.  Upon execution of this agreement, Northstar NJ made a $120m payment to the State, and Northstar NJ has committed to ensuring that at least 30 per cent of annual lottery ticket revenues will be transferred to State institutions and State aid for education.

Under separate supply agreements, Scientific Games and GTECH will provide Northstar NJ with instant lottery games, lottery systems and equipment, and related services. Scientific Games is expected to have a 30 per cent economic interest (and be responsible for 30 per cent of the capital requirements) associated with these supply arrangements.

A. Lorne Weil, Chairman and Chief Executive Officer of Scientific Games, said: “We look forward to working with the New Jersey Lottery, with whom we have a good working relationship, to responsibly grow lottery revenue for the State. We applaud the Lottery for its innovative business model, which will bring in significant resources in terms of capital, talent and entertaining products, to help establish the New Jersey Lottery as an industry leader in terms of both performance and innovation.”

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