NJ looking to boost lottery game development

Apr 15, 2013 10:25 AM

The New Jersey Treasure Department has issued a notice of intent to award a contract to the Northstar New Jersey Lottery Group, a consortium that includes Scientific Games Corporation, to provide marketing and sales services to the New Jersey Lottery.

Scientific Games, currently in the process of expanding into the slots manufacturing field by acquiring WMS Industries Inc., will own 18% of the Northstar joint venture with the partnership of GTECH, a subsidiary of Lottomatica Group of Italy, and the Ontario Municipal Employees Retirement System pension funds holding the other 82%.

The New Jersey Lottery hopes to strengthen its marketing and sales functions and boost its lottery game development. 

The services agreement is expected to commence after a transition period and is expected to end on June 30, 2029.

As for compensation, the contract calls for Northstar to receive incentive payments to the extent the Lottery’s net income exceeds specified target levels, subject to a cap of 5% of the applicable year’s net income.

Also, the agreement provides that Northstar New Jersey will be required to make a $120 million payment to the State of New Jersey upon execution of the agreement.

To finance its acquisition of WMS Industries, Scientific Games has indicated it will borrow $2.6 billion from a group of banks.

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