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Lottery sales lag forecast under new manager

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The Hoosier Lottery’s performance is off-target so far this fiscal year, but it’s too early to give up on the big boost in revenue that’s expected to flow to state coffers under outsourced management, lottery commission staff said Wednesday morning.

Surplus revenue for July and August totaled $35.85 million, about 17 percent less than the $43.3 million that’s forecast for the first two months of the 2014 fiscal year, which ends June 30. The Indiana Lottery Commission in October signed a 15-year management contract with Gtech Indiana—a subsidiary of Rhode Island-based lottery giant Gtech Corp. The company has promised to bring the state $1.76 billion over the first five years.

Chief Financial Officer Tim Kuehr of the Lottery commission said that sales in several game categories, including daily games, Mega Millions, Powerball and instant tickets, were off their forecasts in the first two months of the fiscal year.

Gtech is running the Illinois Lottery as part of a consortium, Northstar Group, which missed revenue targets two years in a row. Northstar has asked Illinois to revise its projected profits since the state rejected a Keno-style game. The Chicago Tribune has found that Northstar’s fiscal year 2013 revenue was $143 million short of the promised amount, meaning the company could owe $40 million in penalties.

Gtech is expected to generate $255.5 million for Indiana coffers in the 2014 fiscal year. That would represent significant growth over 2013, when the state pulled in an estimated $224.6 million, according to the lottery commission’s most recent, unaudited finances.

The lottery has several new initiatives in the works, including new scratch-off games, a multi-state Halloween-themed raffle, and recruiting additional retailers.

The lottery’s goal is to become less jackpot-driven, said Geoff DePriest, director of business plan compliance for the lottery commission.

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  2. I believe that is incorrect Sir, the people's tax-dollars are NOT paying for the companies investment. Without the tax-break the company would be paying an ADDITIONAL $11.1 million in taxes ON TOP of their $22.5 Million investment (Building + IT), for a total of $33.6M or a 50% tax rate. Also, the article does not specify what the total taxes were BEFORE the break. Usually such a corporate tax-break is a 'discount' not a 100% wavier of tax obligations. For sake of example lets say the original taxes added up to $30M over 10 years. $12.5M, New Building $10.0M, IT infrastructure $30.0M, Total Taxes (Example Number) == $52.5M ININ's Cost - $1.8M /10 years, Tax Break (Building) - $0.75M /10 years, Tax Break (IT Infrastructure) - $8.6M /2 years, Tax Breaks (against Hiring Commitment: 430 new jobs /2 years) == 11.5M Possible tax breaks. ININ TOTAL COST: $41M Even if you assume a 100% break, change the '30.0M' to '11.5M' and you can see the Company will be paying a minimum of $22.5, out-of-pocket for their capital-investment - NOT the tax-payers. Also note, much of this money is being spent locally in Indiana and it is creating 430 jobs in your city. I admit I'm a little unclear which tax-breaks are allocated to exactly which expenses. Clearly this is all oversimplified but I think we have both made our points! :) Sorry for the long post.

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