Six N.J. congressmen want DOJ to review Lottery privatization plan

Six N.J. Congressmen are calling on the U.S. Attorney General to conduct a formal review of the Christie administration’s attempt to privatize parts of the N.J. Lottery.

Reps. Donald Payne Jr., Rush Holt, Rob Andrews, Bill Pascrell, Frank Pallone, and Albio Sires submitted a letter to Attorney General Eric Holder requesting that the Department of Justice review the proposal to ensure it  complies with federal law.

“[The] DOJ issued an opinion in 2008 setting forth the narrow circumstances under which a state may enter into an arrangement with a private company to manage its lottery operations,” their letter to Holder states. 

“This opinion explicitly stated that, in order to prevent corruption or the appearance of corruption, a state should not receive any upfront payment from a private lottery manager.  Since it was issued, this guidance has been expressly followed by the only two states that have entered into private lottery management agreements, Illinois and Indiana.”

The Christie administration announced Friday it had reached agreement with Northstar New Jersey, a joint venture made up of Rhode Island-based GTECH Corp., Georgia-based Scientific Games International of Alpharetta and OSI LTT NJ Holdings, to run the lottery.

As part of the agreement, New Jersey is set to receive $120 million upfront once the contract is finalized.

The congressmen’s letter says that “As you may know, New Jersey recently announced its intent to award the contract in response to a single bid to privatize sales and marketing of the New Jersey Lottery.  The State’s Request for Proposal (RFP) requires a $120 million upfront payment from the prospective private lottery manager at the outset of the contract. 

“Some have alleged that this arrangement appears to fall short of the test for compliance with the Department’s interpretation of the law.  We ask you to provide guidance on the legality of this arrangement in order to avoid costly legal challenges should it be deemed unlawful in the future.”

In a release, Payne said, “It is very troubling that there are still so many questions surrounding this proposal.

“The DOJ’s review will provide some much needed answers for the people of New Jersey who are concerned about the integrity of a lottery that generates more than $2.6 billion in revenue for the state, which could be compromised under this new proposal. We are looking out for the people of New Jersey by asking for a simple review to ensure the State is doing its proper due diligence.” 

Diegnan, Weinberg back move

Assemblyman Patrick J. Diegnan Jr., (D-18), South Plainfield, applauded the congressional delegation’s move.

“Now that privatization of the state lottery seems imminent, I appeal to the U.S. Department of Justice, as I did in the resolution I sponsored, to expedite a review of the administration’s privatization plan to ensure our contract does not run afoul of the department’s interpretation of law and result in costly lawsuits to the state as a consequence,” he said in a release.

AR130 urges the governor to seek legal advice from the Justice Department before contracting with a private manager to operate the state lottery to ensure the contract is not inconsistent with the requirements of federal law.

The resolution contends that the authority given to the lottery manager and the compensation proposed under the contract raises serious concerns as to whether the lottery would continue to operate in a manner consistent with federal law. 

Senate Majority Leader Loretta Weinberg also welcomed the call for an official review.

Weinberg, the sponsor of legislation that would require legislative approval before the Christie Administration could privatize the State Lottery and a Senate resolution urging the administration to seek legal input from the U.S. Department of Justice before moving ahead with the contract, said in a release that “In addition to the serious questions about the wisdom of privatizing the New Jersey Lottery there are legal questions as well.

“Past legal opinions by the U.S. Justice Department cast more doubts about the administration’s rush to privatization. If there are legal problems with this deal, they could come back to cost the state in ways that could hurt the lottery directly and have a negative impact on the important services it supports. The administration should have sought this legal input before moving ahead in such a stubborn way.”

  Six N.J. congressmen want DOJ to review Lottery privatization plan