Tayeb Souami of Little Ferry is presented as the $ 313.5 million lottery winner after purchasing the ticket at a Shoprite in Hackensack.
After a massive drop in revenue during the COVID-19 pandemic, New Jersey has an advantage, albeit small, in financial sight: rather than spending at least $ 13 million to pay a bonus to the private company that runs the lottery, that company will pay a multimillion-dollar sanction to the State for not having achieved its sales targets.
Slow ticket sales due to coronavirus and smaller jackpots in the Mega Millions and Powerball games led to a falling fiscal year of 2020, said Lottery Commission executive director James Carey. Sales at the end of June were $ 3.2 billion, an almost 8% drop from $ 3.49 billion in 2019, he said.
Lower sales indicate that Northstar New Jersey, a gaming conglomerate that manages the sales and marketing of the lottery, has been unable to deliver the money it promised the state. With its 15-year contract, Northstar has agreed to return $ 1.08 billion, a percentage of the total sales going to the government employee pension fund. But in June he contributed only $ 937 million, Carey said.
Since the figures have not yet been verified, Carey said it is unclear how much Northstar will have to. The state has set aside $ 13 million for an incentive payment, but since that won’t happen, the money will go to the pension fund.
In recent years the state has paid Northstar bonuses and commissions of up to $ 100 million for strong sales that meet the contract benchmarks. But the dropoff means Northstar will have to pay an unknown deficit to make up for the losses.
“The pandemic has undoubtedly influenced this year’s results, but sales of multi-state games have been the main factor and statistically you would like to see better results from them,” Carey said referring to Mega Millions and Powerball, which are reproduced in most states.
These games had several big jackpots in fiscal 2019, which means that players continued to buy tickets without hitting the top prize, increasing sales. There have been far fewer jackpots in the past year, Carey said.
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In addition, blockade orders issued by Governor Phil Murphy in response to the coronavirus put a strain on ticket sales for March and April, Carey said. In April, for example, sales of all games declined 29%, or $ 63 million, over the previous year, according to lottery commission documents.
Those late sales contributed to a financially painful period from which the state is still trying to recover. The Murphy administration has forecast a shortage of revenue for this year and the 2021 fiscal year of $ 10 billion and plans to borrow $ 9.9 billion to compensate, although taxpayers would spend decades repaying it with interest. .
The pandemic forced Murphy and lawmakers to extend fiscal year 2020 beyond the 30 June to 30 September deadline. But the Northstar contract kept the 12-month fiscal year, which means 2020 ended for the company last month.
Although poor lottery sales adversely affect the state, at least it has added some protections to recover money. The administration renegotiated the contract with Northstar last year to reduce incentives and increase the conglomerate’s performance targets.
This adjustment took place two years after the U.S. TODAY Network Atlantic Group Trenton office reported that the previous administration failed to do so when Northstar added new game styles that triggered renegotiations on more favorable terms. The updated contract is expected to save the state up to $ 100 million in the next decade.
Checked figures are expected to be complete between October and December, Carey said.
Although sales have rebounded in recent months, Carey said that “an element of uncertainty” is going on due to the pandemic. A second wave is expected in the fall and could trigger stricter measures that reduce ticket sales.
“We don’t know where the economy will be and where the world will go in the next two months,” Carey said, adding that “the fiscal year has been a busy year and we will work hard to do better in the future year and see what happens.”
Dustin Racioppi is a journalist in the New Jersey State House. For unlimited access to his works regarding the governor of New Jersey and the political power structure, sign up or activate your digital account today.
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