UK National Lottery operator Camelot has set an ambitious $4 billion annual sales goal for the flailing Illinois Lottery next year.
The State Journal-Register reported that Camelot Illinois, a local subsidiary of UK lottery giant Camelot Global, will be taking control of the Illinois Lottery on January 2 from Northstar Lottery Group after the British firm won the $2.2 billion management contract.
Illinois fired Northstar after it failed to reach its target revenues and caused other problems that sent the lottery agency into a downward spiral. Data showed that Illinois lottery posted flat sales of $2.85 billion in its most recent fiscal year.
Camelot knows that it may suffer the same fate as Northstar if it falls short of its ambitious goal to jack up Illinois’ lottery sales to $4 billion annually.
The British firm also knows that it can only get incentive compensation if net lottery income exceeds the numbers indicated in the contract it signed with Illinois.
Based on the contract, Camelot must produce a net profit of $731 million in the contract’s first full year and $859 million in the final year. Illinois will also be reviewing and reconciling Camelot’s management fee, which is around $25 million in the first year.
That’s why Camelot is now setting aside $15 million for the purchase of newer technology and prominent retail sales equipment. The firm also plans to tap mobile apps for marketing.
“The more we grow, the more we sell, the more state benefits… and so do we,” Camelot managing director Neil Brocklehurst said, according to the news report.
It was agreed upon by the two parties that Camelot’s incentive bonuses would between 17 to 27 percent of the profit.
Meanwhile, Camelot is projecting that they will be paying around $23 billion in prizes in a span of ten years. Camelot’s new deal “mandates transparency and regular audits,” suggesting the Illinois Lottery intends to keep a closer eye on day-to-day operations.
Illinois was the first state to privatize the management of its lottery after lawmakers made the historic vote in 2009. The state is using lottery proceeds to help fund education and construction projects.