Hoosier Lottery operator (IGT) on track to earn first incentive payment under privatization deal

in Lottery

INDIANAPOLIS — IGT Indiana, the company hired five years ago to manage Hoosier Lottery sales and marketing, is poised to earn its first incentive payment if lottery income continues on course through the June 30 end of the state's budget year.

Data presented Tuesday to the State Lottery Commission show that between July 1, 2017, and April 30, the Hoosier Lottery sold $1.07 billion in tickets, up 7.7 percent compared to the same 10-month period one year earlier.

At that pace, lottery revenue for the year is projected to hit $1.26 billion, a new record, and 4.1 percent greater than 2017.

That revenue total also is expected to produce a "provider net income" of $313 million after deducting prize payments and IGT operating expenses.

As a result, IGT Indiana would be in line for an incentive payment of $6.5 million under the privatization contract revised in 2016 where the company and the Hoosier Lottery this year split any income above $300 million.

After deducting its expenses, the state then would receive an estimated $301.8 million in lottery profits — also a new record, and an 8.4 percent increase over 2017.

Lottery profits primarily are used to reduce vehicle excise taxes paid by Hoosier motorists, to fund state building construction projects and to support pensions for teachers, police and firefighters.

William Zielke, chairman of the State Lottery Commission, congratulated both the Hoosier Lottery and IGT Indiana staff for finally achieving the "neat milestone" of an excess income split.

IGT Indiana was required to pay the state shortfall penalties in the first two years of the 15-year privatization deal when the company failed to meet its income targets.

After the original contact was revised, IGT Indiana achieved its reduced minimum income goals in 2016 and 2017, but did not reach the income level needed to qualify for an incentive payment.

Next year, IGT Indiana must earn $305 million in provider net income to split the excess with the state.

The company is planning to emphasize new scratch-off games, including "The Voice"- and "The Wizard of Oz"-themed games, in order collect the $1.3 billion in revenue that it believes it needs to exceed its 2019 income target and qualify for another incentive payment.

http://www.nwitimes.com/news/local/govt-and-politics/hoosier-lottery-operator-on-track-to-earn-first-incentive-payment/article_b661764a-8967-537d-8e90-0a32c8fe79eb.html