Newspaper article The Record (Bergen County, NJ)

Democrats Seek to Slow Lottery Plan

Newspaper article The Record (Bergen County, NJ)

Democrats Seek to Slow Lottery Plan

Article excerpt

New Jersey is looking to have a private company manage its $2.7 billion lottery, a move the state says will boost revenue once the privatization plan is in place.

Democrats say the move is unnecessary, and small-business owners say it could hurt their stores, which already operate on razor-thin margins. But it is unclear what the Legislature could do to stop it - - and Democrats are now seeking legal advice to get ideas.

"The horse is sort of out of the barn, so I'm trying to rope it back in," Assemblyman Vincent Prieto, D-Hudson, said Wednesday after a budget committee hearing on the move.

The Treasury Department issued a request for proposals in August, trying to find a company to oversee the lottery's sales and marketing. The winning company would have to pay $120 million upfront and follow a state law that requires at least 30 percent of lottery revenues to be paid to the state's social and educational programs.

In exchange, the company could take as much as 5 percent of the lottery's net income.

The money at stake in the deal is huge: The lottery took in $2.7 billion in revenue in the last fiscal year -- about $313 for every resident of the state -- with $950 million of that going to social and educational programs.

By comparison, New Jersey collected about $8 billion in sales taxes during that same time. The lottery is the state's fourth largest source of revenue, according to the Treasury Department.

The company would set a target income for the lottery each year. If it failed to meet that target, it would pay the state a percentage of the shortfall. But under the terms spelled out by the state, the company would be forgiven the first $20 million worth of shortfall payments, and it would never have to pay more than 2.5 percent of the lottery's total income.

Democrats at the Assembly Budget Committee hearing Wednesday said they did not see a need to change the way the lottery works, and they criticized what they said was a lack of transparency by the Christie administration. …

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