GTECH S.p.A. announced that Northstar New Jersey Lottery Group has signed a 15-year services agreement with the New Jersey Lottery
ROME, ITALY and PROVIDENCE, RHODE ISLAND (US) – June 21, 2013 – GTECH S.p.A. today announced that Northstar New Jersey Lottery Group, LLC (“Northstar NJ”) has signed a 15-year Services Agreement with the New Jersey Lottery. The term of the Services Agreement will run through June 30, 2029, with transition services commencing immediately, and with full services expected to begin on October 1, 2013. Northstar NJ is a joint venture comprised of GTECH Corporation (“GTECH”), a wholly-owned subsidiary of GTECH S.p.A.; Scientific Games New Jersey (“Scientific Games”), a wholly-owned subsidiary of Scientific Games International, Inc.; and, OSI LTT NJ Grantor Trust (“OSI”), an affiliated entity of OMERS Administration Corporation. GTECH and OSI each own approximately 41% of Northstar NJ with Scientific Games owning approximately 18%.
Under the Services Agreement, Northstar NJ will manage a wide range of the New Jersey Lottery’s marketing, sales, and related functions, subject to the Lottery’s continuing control and oversight over all significant business decisions. Responsible gaming programs will be embedded throughout these operational processes and core functions.
“We are looking forward to our new partnership with Northstar New Jersey,” said New Jersey Lottery Executive Director Carole Hedinger. “The New Jersey Lottery is a top-performing lottery. This partnership will help us achieve even greater success for New Jersey education, institutions, and its citizens.”
“We were able to submit a compelling proposal to New Jersey based upon our operational expertise, innovative technology solutions, and local market knowledge, all of which will drive this Services Agreement,” said GTECH S.p.A. CEO Marco Sala.
“Northstar NJ has developed a comprehensive business plan to generate approximately $1 billion of additional net income for the State of New Jersey over the first five years of the base Services Agreement commencing July 1, 2014,” said Chairman of Northstar NJ and President & CEO of GTECH Americas Jaymin B. Patel. “We are deeply committed to working even more closely with the New Jersey Lottery in the future to achieve even greater success, building upon their outstanding track record of efficiency and revenue results. We are confident we will be able to deliver on our commitments and fulfill the State’s objectives through a management team with deep New Jersey and global lottery-industry experience, and an overall business plan to drive value for the State of New Jersey and its citizens.”
“We look forward to working with the New Jersey Lottery, with whom we have a good working relationship, to responsibly grow lottery revenue for the State," stated Chairman and Chief Executive Officer of Scientific Games A. Lorne Weil. "We applaud the Lottery for their innovative business model which will bring in significant resources in terms of capital, talent and entertaining products, to help establish the New Jersey Lottery as an industry leader in terms of both performance and innovation.”
Senior leadership for Northstar NJ has been identified and is ready to begin the transition to the new Marketing and Services model immediately.
Northstar NJ will be reimbursed monthly for certain manager expenses, including personnel costs and other overhead expenses. Certain costs, which include fees to subcontractors, including GTECH and Scientific Games, will also be reimbursed to Northstar NJ by the State.
To the extent that the net income earned by the State each year exceeds the base net income level for such year set by the State and published during the procurement, Northstar NJ will earn incentive compensation that is awarded based on various levels of performance, up to an annual maximum of 5% of the actual net income earned by the State in such year. The incentive compensation that Northstar NJ may earn could be reduced by a net income shortfall payment in the event Northstar NJ's performance does not achieve the minimum profit levels it has guaranteed. Northstar NJ will be responsible for payments to the State to the extent the Lottery net income levels set forth in Northstar NJ’s successful bid are not achieved, subject to a cap of 2% of the applicable year's net income and a $20 million shortfall payment credit.
Northstar NJ has also made a $120 million payment to the State, and it has committed to ensuring that 30% of total lottery ticket sales will be transferred to State institutions and State aid for education on an annual basis.
About Scientific Games (www.scientificgames.com)
Scientific Games Corporation (Nasdaq: SGMS) is a global leader in providing customized, end-to-end gaming solutions to lottery and gaming organizations worldwide. Scientific Games' integrated array of products and services includes instant lottery games, lottery gaming systems, terminals and services, and internet applications, as well as server-based interactive gaming terminals and associated gaming control systems. For further information, visit Scientific Games’ website at www.scientificgames.com.
About OMERS (www.omers.com)
OMERS is one of Canada's largest pension plans, providing retirement benefits to 429,000 members across Ontario, Canada. With more than CAD$60 billion in net assets and an AAA credit rating, its team of investment professionals uses a direct drive, active management investment strategy to invest in public and private market assets, including publicly-traded equities, fixed-income, infrastructure, private equity and real estate. For more information, please visit www.omers.com.
About GTECH (www.gtech.com)
GTECH S.p.A. is a leading commercial operator and provider of technology in the regulated worldwide gaming markets, delivering best-in-class products and services, with a commitment to the highest levels of integrity, responsibility, and shareholder value creation. The Company is listed on the Milan Stock Exchange under the trading symbol “GTK” and is majority owned by De Agostini S.p.A. In 2012, GTECH had €3.1 billion in revenues and 8,600 employees in approximately 60 countries. For more information, please visit www.gtech.com.
Robert K. Vincent
T. (+1) 401 392 7452