State lotteries increasingly cede control to huge firms

Until this time, only Illinois, Indiana, and New Jersey have actually "privatized" their own lottery projects.

On Friday, January 22, 2021, a megamilion's game seat for players who like to choose numbers, displayed at a treasure shop on a skirt of Cranberry Township, Pennsylvania. [Keith slakot | AP].

• Tinache Gengande, Elizabeth Hula, Spencer Friedman, Daniel Lou All Howard Journalism

Published on July 15, 2022

Companies that manage local government lotteries already have many authority in game management. However, in the highest year, their controls for lotteries will be important, while officials will be one step down.

Analysts, who are pursuing history in affiliate talks, in fact, most of the cool liquid companies are actually called "comprehensive partnerships" with the state, and some are called "privatization programs" and daily management. He is trying to do something to move a large share of hiring from a state strategic conclusion to a private company.

The US lottery industry is dominated by a small company that covers the two major giants, the International Game Technology PLC and the Scientific Games Holdings LP, and the Intralot Sa and the Pollard Banknote LTD. Since the state does not want to take risks and do not want to hire newcomers to manage this gorgeous business, these fastest companies sell tickets that reached $ 82 billion in the 2020 fiscal year, this market. Will continue to reign.

The US lottery system is transformed into a sem i-private company that manages this difficult gambling, with the state government playing the role of supervision, private companies receiving millions of dollars.

These companies provide software and computer systems that support games, such as Pick 4 in Kentucky and Maryland, cash pop in Florida, and Coloradado. Even today, some companies are manufacturing terminals, including printing tickets, processing winning tickets, and number of video copy terminals used in retail stores.

They also provide these large multifunctional lotteries, such as Megamilions and the most popular powerballs that entered the $ 1. 6 billion of the $ 1. 6 billion in 2016.

These companies play an important role in all 45 states in which lotteries operate, and in the Columbia Special Zone in Washington, brunch and expert views are changed in this way. Almost absolute control of the lottery of the control local government is received.

"With a continuous transition, companies can effectively provide more services and manage almost all at the en d-t o-end," said the Moody Investments Service in New York, Vice President and Senior. Moody's Adam McLaren said.

As the lottery jackpot grows in several states and the introduction of new products such as sports betting, the technology needed to manage these changes and modernization is becoming increasingly complicated.

According to McLaren, each state has no capital or experience to manage these systems, manage and protect user data, and develop new games while developing new games.

To date, only three states in Illinois, Indiana, and New Jersey have decided to privatize the lottery business. In 2011, the Northstar Lotti Group LLC, a consortium for international gaming technology and scientific games, first did it. A year later, Indiana bought international game technology and chose the company in 2014, which used its name. New Jersey signed a contract with the North Star in 2013.

In such transactions, private managers usually undertake sales, marketing, and lottery management functions in exchange for lum p-sum payments and promises that bring the minimum net income to the state.

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Everything is not always going well. A few years later, Illinois had a smaller income than expected, so he expanded his contract with the North Star. Later, he hired a British Camelot Group, which operates a British stat e-owned lottery.

In a contract with Northstar, which was concluded by New Jersey in 2013, the state received $ 120 million in advance, and the company would bring at least $ 1. 42 million pure income during the contract period. I promised. In a press release announced at the time, the state stated that the transaction would generate more income than expected if the lottery business was not changed.

"By gathering lottery and Northstar NJ's skills and resources, it can increase the presence of lottery in the market, provide customers with new very interesting games, and provide new offers to retailers." Carroll Hedinger, the executive director of the New Jersey lottery at that time. However, the Northstar could not achieve the set goal and was r e-negotiated in 2019.

In February, Washington Lotry in Colombia's special ward faded out of profits when the sports betting function failed between the super cups, one of the largest days for sports and betting. Was ruined. In 2019, DC Lotary had signed signatures on a five-year sport rate and other lottery offers, accused the violation Intralot SA. In April, DC Lotty basically said what appeared from Intralot -$ 500. 000 compensation for a major failure on a superbell.

Is it really privatization?

There is a limit to the possibility that controls will move to the state. Federal law generally does not allow private companies to instruct the lottery, and alleged that their existence could lead to corruption.

In 2008, the Ministry of Justice issued a recommendation that the state had all the opportunities to take a private company to actually manage some of the lottery qualities, but the council is also actually. Federal Law stated that the state was called to protect the control of "all important business solutions", and that private companies did not have any opportunities to get more than the "share" of profits. 。

This discussion should be actually required to be a private company, not a private company, to conclude, for example, to the participation in different states, solving online sales, and developing applications for sports tariffs. That means.

"Phrase 'minimum profit/ loss' means that it is substantially giving a sense of the Ministry of Justice, in fact permits a rental property that can completely acquire lotteries for a specific lon g-term period. The Vice President of the Renade Gilra, the Reasons Foundation, and the Rivatarian Organization's government reform, I believe that it is necessary to privatize the main mass of the government's business function.

According to Gillory, the Ministry of Justice's conclusion is that there is no possibility that the lottery will be completely private. "This will not happen. Federal law will not allow this," he said, in effect, in fact, the main intentions of the privatization were considered to be public and private partnerships.

Despite this, whether they are called privatization intentions and partnerships, experts come together in a world view, and in the future they will be created further in the future.

In a recent report on scientific gaming, Zacks Investment Research Inc., Chicago, said the lottery industry has already begun to move toward private management, as evidenced by "the increasing role of private operators in managing municipal lotteries, accumulating prize payouts, and entering multilevel prizes in games with state jackpots."

David Gale, executive director of the North American Municipal and State Lotteries Association, says there are real reasons for lottery companies to take on a more prominent role. According to his writing, they need to create systems to handle the staggering number of instant tickets, design and build new terminals, as well as move lotteries online.

"States have no chance to manage autonomously, they're not the manufacturers," Gale said. The correspondence gives 53 lottery organizations.

The record jackpot Powerball is located in the marketing shield of the Kansas Lottery in the subject, Kansas, on the first day of the week, 11 January 2016 [Olin-Wagner | AP].

A recession-proof industry

The lottery business - one of the few sections of the gambling industry once similarly protected from the recession.

At the beginning of the pandemic, casinos, for example, were in dire straits from closure, as COVID-19 was introduced and restraining orders were introduced to workhouses. On the other hand, the lottery business, while the gambling business as a whole was hurt by the pandemic, some business such as age landed.

In the first year of the pandemic in 2020, Scientific Games actually combined rescue to the tune of $2, 7 billion, down 20% from $3, 4 billion in 2019, in line with its 2020 annual report. However, the company's gaming revenue at this stage was down 47% to $926 million. Meanwhile, profits from the lottery business have aged slightly, reaching $918 million in 2020, compared to $911 million in 2019.

The performance of the IGT company has improved due to the lottery business. IGT stated that in 2020, the lottery company's profits arrived at $953 million, arriving 45% higher than the previous year's comparison, while the lottery company's profits fell by only 5 or 6%, reaching $2. 2 billion. Both divisions will recover in 2021. IGT categorically denied this statement, but in its own annual report for 2021, it stated that "the global lottery industry has shown remarkable stability during the COVID-19 pandemic."

On the other hand, an increase in the jackpot could lead to increased profits. In 2016, when the Powerball jackpot reached $1. 6 billion, IGT's profits reached $5 billion, which was, in fact, a record indicator. The company has not acknowledged the increase in the Powerball jackpot.

Consolidation and lack of competition

However, while lottery profits are growing, the number of companies that provide lottery is decreasing. To some extent, this is explained by a series of decades of combination and acquisition, which has led to the integration and concentration of business in Canada and Europe, ignoring the fact that most companies are the coolest market for most companies. It will be done.

Scientific's latest lottery and literary games conducted a personal lottery business of personal INVESTO-Company Brookfield-Business-Partner LP in April for about $ 6 billion. The shares owned by Scientific Games are involved in major slot machines, online games, or I games, renamed Light & amp; amp; Wonder Inc., and is based in Las Vegas. Brookfield will take over the title from Scientific Games and dispatch a distribution squad near Atlanta.

As a result of this transaction, two companies in Canada, Pollard, two IGT and Camelot in the UK, and one of Intralot in Greece stayed at the forefront of the industry.

"For many years, lottery companies have been more than three times. The number of companies has decreased due to disposal, redemption, and merger." The new company did not appear.

Constance Mitchell Ford of Maryland University has created this report.

The Hovard Center of the Mary Land Institute has pioneered a pioneering newspaper in Roy V. Howard, and is operated by the CHICPPS Hovard Foundation subsidy. < SPAN> However, while the lottery profits are growing, the number of companies that provide lottery is decreasing. To some extent, this is explained by a series of decades of combination and acquisition, which has led to the integration and concentration of business in Canada and Europe, ignoring the fact that most companies are the coolest market for most companies. It will be done.