A contract is binding

Business was good at the Illinois Lottery, but not as good as promised.

A deal is a deal, even with the state.

That's the bottom line in a decision by state officials to impose a $20 million penalty on the private entity that is running the Illinois Lottery.

When Northstar Lottery Group won a competitive bid for the contract to run the lottery, it promised to generate $823 million in net income for the 2012 fiscal year, which ended June 30, 2012. Northstar increased state revenues by $400 million but still fell more than $60 million short of its contractual pledge of $823 million.

So the fine is fine, at least under the terms of the contract. Naturally, Northstar officials are angry, suggesting it is unfair. But their perspective is skewed. They previously suggested that not only should they not pay a penalty but that they should be paid a bonus for FY 2012.

It never hurts to ask, but the company's request was, to put it mildly, unrealistic.

Northstar won its state contract on the strength of its bid. To not hold Northstar to the contract's terms would both sell taxpayers short and double-cross Northstar's rival bidders.

The lottery is a nasty business. It feeds people's desire to get something for nothing and costs most for those who can least afford it. At the same time, it's a political no-brainer because people are voluntarily depositing their money in the state's treasury.

There is, however, nothing nasty about Northstar's penalty. It's just business.

Sections (2):Editorials, Opinion
Categories (2):Editorials, Opinions

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Sid Saltfork wrote on March 20, 2013 at 5:03 pm

"A deal is a deal, even with the state."  Does that go both ways, or only one way in the state's favor?  It does not seem that the State of Illinios keeps it's deals when debts are owed.

North Star has the same complaints from other states that awarded North Star, and it's parent company Gtech Gaming their state gambling contracts.  The circumstances of North Star being awarded the contract in the first place should be re-examined.  One member of the state commission recommending the contract award was an appointed state employee while at the same time was an employee of North Star.  The "campaign donation" to Gov. Quinn from Gtech a few weeks prior to the contract being awarded is another suspicious matter.  The circumstances were reported at the time; and a year later, one legislator asked for an investigation on the awarded contract.  Nothing came of the request, and the investigative journalism though.