Why change the rules?
There's a solution to falling short of performance goals — just reduce the goals.
In 2010, the state of Illinois contracted with a private company to manage its lottery, and the company recently generated a record $726 million in net revenues.
But there's a problem. When Northstar Lottery Group submitted its bid for the lottery contract, it promised to produce $825 million in profits, nearly $100 million more than it delivered.
Now the company is not only seeking to avoid the financial penalties it would owe the state for failing to meet its pledge, but also is seeking bonus payments for the revenues it did generate.
State officials say an arbitrator will decide the issue. But what's to decide? Isn't a contract a contract?
Well, maybe not if the contract is with the state of Illinois.
Illinois officials decided a few years ago that the state's lottery could do better in producing revenue. That's a pernicious goal because the revenue the lottery generates mostly comes from people who can't afford to lose money but can't resist the lure of something for nothing.
Northstar won the bidding for the contract with the $825 million revenue pledge. As soon as it won the contract, it asked the state to agree to a reduced profit commitment that was crucial to its winning bid.
News reports indicate that Northstar wants nearly $140 million in concessions.
There is no question that Northstar has done a good job of ramping up the lottery. Despite falling short of its commitment, it produced record profit for the state by generating new games and expanding the number of retailers selling tickets.
But a deal ought to be a deal. No one put a gun to the head of Northstar managers as they prepared their bid. There is no reason to spare Northstar the consequences of its offer, and certainly no justification for paying a bonus for not meeting the agreed-upon revenue goals.