ANOTHER OPINION: Lottery Privatization – It’s Still A Gamble

Filed under: Latest News,Opinion |

 

STATE REP. RON WATERS

STATE REP. RON WATERS

 

BY STATE REP. RON WATERS/ The 127-page transportation bill has been signed by the Governor. This undoubtedly means the resuscitation of controversial statewide debates such as pension reform, liquor privatization and — as recent rumblings suggests — lottery privatization.

 

Former Gov. Ed Rendell and Gov. Tom Corbett have reengaged in talks to move forward with a plan to privatize the state-run lottery system. Rendell is a senior advisor for the firm Greenhill, which was awarded a sole-source financial services contract to oversee the Governor’s privatization deal with British company, Camelot Global.

 

Perhaps a decision to move forward with a deal struck with the lone bidder will prove to be the best move for the state of Pennsylvania and the senior programs that rely so heavily on lottery-generated revenue — and perhaps it will not. I believe relinquishing control of our lottery to a foreign company will hurt Pennsylvanians, specifically seniors.

 

The Dept. of Revenue reported the Pennsylvania Lottery had $3.7 billion in sales in the 2012-13 fiscal year, an increase of more than 6%. The lottery earned more than $1 billion in profits while keeping the administrative costs at just 2.07% of sales.

 

This begs the question: Why is so much effort being poured into fixing something that isn’t broken?

 

It is important to keep in mind what is at stake here. The popular Property Tax/Rent Rebate Program and programs that fund prescription drug purchases are just a few services that can be adversely affected by a decision to privatize.

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Projections show 25% of Pennsylvanians will be 60 years or older 16 years from now, making the aforementioned programs ever more essential. The plan put forth by Camelot is front-loaded to generate lottery profits in the first few years of the deal, but in the out years, Camelot guarantees lottery growth of just 1%, and that is right around the time when the number of seniors needing services in Pennsylvania will be rising.

 

For a real-world example of what privatization could mean, we needn’t look further than the State of Illinois, which became the first state to privatize its lottery when it did so two years ago. Last year, the company hired to run the Illinois Lottery missed its sales goals for the second year in a row.

 

With Illinois in mind, one thing is clear: Privatizing the Pennsylvania Lottery is as much as a gamble today as it was a year ago.

 

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