TRENTON – Senate President Richard J. Codey (D-Essex) today unveiled a blueprint to revolutionize the way the New Jersey Lottery is run in order to maximize revenue potential to help address the state’s fiscal needs. Codey’s proposal calls for harnessing new technologies in emerging markets and tapping into an entirely new consumer base that will expand the lottery’s focus beyond traditional low and moderate income customers.
“If done right, I think this can provide a substantial added revenue source for the state,” said Codey. “There are marketing avenues out there today that did not even exist when New Jersey created the lottery. Like any company that’s looking to expand their market potential, we need to start thinking outside the box and finding new and innovative ways to expand our distribution channels,” added Sen. Codey.
In doing so, Sen. Codey proposed expanding New Jersey’s market penetration, which currently ranks 20th nationally, by looking to negotiate deals with big box department stores and other popular retailers to sell lottery tickets at their locations. Tickets could be sold at the cash registers with specific games developed to tie into a store’s theme.
In order to expand the lotteries reach and accessibility, Codey is proposing that the state adapt the lottery to the latest technologies by also making it available via the Internet, cell phones and PDA devices. Codey also suggested that the state could realize even more revenue by selling advertising space on the back of tickets.
“These components are key, not only in driving revenue, but in reaching customers with a wide-range of incomes, moving the lottery away from what some consider to be a regressive revenue raiser,” added Sen. Codey. “The state does a decent job of running the lottery, but we could strongly benefit from experts in the field in terms of technological innovation.”
Sen. Codey said he believes the best way to maximize this untapped lottery revenue is to enter into an operating agreement with a professional consultant that would allow them to share in the profits if certain revenues are achieved. This would also provide a true incentive for the consultant to pursue all avenues of revenue, thereby drawing in more money for the state.
Sen. Codey also said he believes that the state could structure an agreement so that it falls within the confines of the constitutional language regarding the lottery. Codey suggested that a constitutional amendment may not be necessary to pursue these proposals given the way the lottery is currently operated. He noted that even if a private operator or consultant were running the day-to-day operations of the lottery, the state could still maintain necessary control and oversight of the supervisions, in much the same way that the state oversees the current private operator.
Similarly, Codey noted that although the constitution currently states that all net proceeds must be used for state institutions and state aid for education, the state currently pays vendors a percentage of their sales and bonuses for selling winning tickets. Codey added that this calls into question whether the state could use the additional proceeds that might be generated to address some of its pressing fiscal needs.
“I agree that there would be constitutional issues if the state were ceding ownership or oversight of the lottery to a private vendor. But that’s not what we’re looking to do. Our goal is to maintain oversight and control of this asset, while unlocking what may be billions of dollars in revenue potential.”
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