New lottery deal includes lower targets, locked-in revenue

The state lottery and the private company overseeing part of its operations have agreed to lower revenue targets and guaranteed income for three years.

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The state's Department of the Treasury announced on Thursday that Northstar New Jersey and the state agreed to changes after officials denied the company's request to approve monitor games, like keno. Officials say the deal locks in $960 million for the state in fiscal year 2016, below the $1 billion earlier estimated by the treasury department.

The deal also sets revenue targets at $965 million for fiscal year 2017 and $985 million the next year. Officials say the deal guarantees revenue growth of $30 million over three years or the company would have to pay the state to make up the difference.

The new deal also changes how much Northstar can earn in incentives by exceeding the targets, from a cap of 5 percent of net income to 3 percent.

Officials say under the 2013 contract Northstar could revisit the agreement after the state's decision to deny authorizing games like keno.

Since Northstar took over some operations under the 2013 contract, the lottery has missed revenue targets. In the last fiscal year revenue fell by $5 million. Officials say it's because of a national downward trend in lotteries.

Lottery executive director Carole Hedinger said getting out of the contract, as some critics have suggested, is not a viable option.

The state would to hire dozens of sales, marketing, advertising, technology and retailer relations experts, she said in a statement.