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SPRINGFIELD — Some of the dates don’t add up for how the state chose the Northstar Group to run Illinois’ Lottery.

By Benjamin Yount

SPRINGFIELD — Some of the dates don’t add up for how the state chose the Northstar Group to run Illinois’ Lottery.

The state’s Department of Revenue gave Northstar, a consortium of companies that handles lottery machines in Illinois, the nod in September to take over day-to-day operations of the $2-billion-a-year lottery.

The company is set to take over the lottery July 1 and has promised to generate more lotto sales, $1 billion in five years. In return Northstar could get $313 million.

But those dates are not the ones that caught the eye of Illinois Auditor General Bill Holland. Holland on Tuesday released an audit that focuses on how the state chose Northstar.

Among the findings, the Illinois Department of Revenue hired an assistant to facilitate the selection of a new lottery manager on May 29, 2010. But the audit states the assistant started working on May 12, 2010, 17 days prior to signing a contract. And the deadline for potential lottery managers to submit their proposals was due on May 27, 2010, two days prior to the contract being awarded.

This report “documents a process that is flawed,” said Holland in an interview with Illinois Statehouse News.

Mike Klemens, a spokesman for the Department of Revenue, disagreed with the audit’s findings. He said the process of picking a new lottery manager was “fair and transparent,” and resulted in the state hiring a company that could make a lot of money for Illinois.

Klemens dismissed the questions raised in Holland’s audit.

“What I find (in the audit) is a lot of speculation and what if’s,” said Klemens. “There is not a statement that ‘Hey, you did something wrong.'”

Holland angrily rejected any notion of speculation.

“We clearly document that the Department of Revenue paid an adviser nearly $5 million without any clarity about what he did, or when he did it,” said Holland. “We clearly document that scoring sheets were late. There is no speculation about it.”

The dates on the scoring sheets, which are used to rank bidders for the lottery management spot, are another problem highlighted in Holland’s audit.

The report states that on Aug. 3, one of the people helping with the selection of a new lottery manager received the three proposals that contained more than 2,600 pages, which needed to be scored in three days. Another person on the team picked up another set of proposals on Sept. 8, signed and dated them as scored the next day. The audit makes note of the apparent speed reading.

“Each of the two proposals was in excess of 800 pages and contained the Final Business Plans on how the proposer would manage the $2 billion State Lottery,” stated the report.

Klemens, again brushed off the report, and said some scores were hand-delivered, while others were emailed. Bottom line, Klemens said, the process was proper.

“The auditor is saying there’s a lack of documentation (about the score sheets),” Klemens added. “But proper documentation is in the eye of the beholder.”

Holland said his report deals with facts, not interpretations.

Holland’s facts are the first that shed light on what has been a shrouded process.

Byron Boothe, vice president of government relations with Intralot, which also bid for the lottery contract, said the report confirms what he saw firsthand.
“The Department of Revenue has been playing hide the ball,” said Boothe. “This audit shows it’s not just hide the ball from us, but from the auditors, and the people of Illinois.”
Boothe, and the Athens, Greece-based Intralot, have been trying to get answers about the selection process and the final agreement between Illinois and Northstar, since this past year, but the Department of Revenue has shut him out.

State Rep. Jack Franks, D-Woodstock, said the state needs to stop the transfer of the lottery to Northstar before the group takes over July 1.

“At the very least (the Department of Revenue) should not go forward until we have answered these very serious questions.” said Franks.

Holland would not speculate on when, or if the Legislature would step in, but the dates surrounding the deal with Northstar should give state leaders pause.

“This is a $2 billion state asset. And the process (to pick a new manager) was flawed,” said Holland.

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