Battle lines forming over Lottery privatization issue
On few issues are the battle lines being more sharply drawn here than the privatization of the Pennsylvania Lottery.
The issue, after all, involves the future of a program that has provided $22 billion in revenue during the past 40 years to programs providing seniors with property tax and rent rebates, transit rides, subsidized prescription drugs and long-term living services.
The Corbett administration recently took a major step on the way to privatization by seeking bids from private firms interested in managing the lottery. Democratic lawmakers are vociferous in their opposition to the idea.
Camelot Global Services, the firm that runs the British lottery, has submitted a bid to manage the lottery for 20 years and pledges to produce more than $34 billion in profits during that period.
Gov. Tom Corbett said the goal is to generate more and predictable revenue for programs that benefit a senior population that is growing dramatically.
"Let's see if we cannot bring more income for the seniors of Pennsylvania," Corbett said last week at the Pennsylvania Press Club. "We want to see if we can increase the rate of growth of the lottery."
Demographics are at work here, with the numbers of Pennsylvanians age 65 and older expected to increase nearly 27 percent by the end of this decade, according to a new analysis by the state Independent Fiscal Office.
Democratic lawmakers question why the effort to fix what isn't broken.
"Why would we privatize a state-run operation that is the gold standard of how to run a lottery?" asked Rep. Eddie Day Pashinski, D-121, Wilkes-Barre, a member of the House Aging and Older Adult Services Committee.
He said the costs of running the lottery are under 2 percent.
"The Pennsylvania Lottery just had its best financial year ever and lottery revenue has been more reliable and predictable over the years than almost any other revenue source in state government," said House Minority Leader Frank Dermody, D-33, Allegheny County.
The state Revenue Department has announced the key terms involving any private management agreement. These include a 20-year contract and requirement for $150 million in up-front cash collateral. A management firm would be expected to find ways to boost sales, possibly by adding keno or online games. The state would retain ownership of the lottery.
A multi-agency team is exploring the private management option.
"This is a careful ... process where each decision impacts the next step, and there are a number of 'next steps' to consider in coming weeks, including contractually mandated dialogue with the union representing lottery employees," said Revenue Secretary Dan Meuser.
(Robert Swift is Harrisburg bureau chief for Times-Shamrock Communications newspapers. Email: email@example.com.)