Government
8:07 pm
Wed November 21, 2012

Mixed Reactions to Pennsylvania Lottery Privatization Bid

Governor Tom Corbett is reviewing a contract bid from Camelot Global Services that would put the British company at the helm of Pennsylvania's $3.5 billion lottery system. In the meantime, politicians and experts are expressing mixed reviews of the privatization bid, which promises billions of dollars in additional revenue over the next twenty years.

 

State Senator Wayne Fontana, an opponent of privatization, said it’s curious that the commonwealth has received only one finalized bid since it requested private management proposals in April.

 

“We have a company that is outside the country that’s bidding on it,” said Fontana. “I understand they’re changing some of the criteria. The $150 million [bid security] pot that they were supposed to create in case they don’t hit certain levels of profitability is being reduced to $50 million.”

 

Fontana said he’s disappointed that the governor would consider eliminating union jobs in Pennsylvania in order to shift the lottery’s management to a foreign company. The Brookline Democrat said he thinks Governor Corbett may simply be trying to reduce the size of the state’s payroll.

 

“It certainly seems that way, and it’s unfortunate that we have folks that are looking for work and we’re going to put more folks on the unemployment lines,” said Fontana. “[Corbett] certainly did that through cuts in education, same type of mentality or mission.”

 

Camelot has operated the lottery system of Great Britain for decades.

 

Gambling expert Bill Thompson, professor emeritus at the University of Nevada Las Vegas, said it’s “a little surprising” that Pennsylvania got only one bid, but he said there aren’t many local options here.

 

“They had to go out of the country to get it because within the United States, the bureaucracies in state governments have sort of grips on the lotteries, so you don’t have this private expertise developing as much,” said Thompson.

 

Thompson noted that Pennsylvania may even have been lucky to get a bid from an English-speaking firm. He said lottery management by Camelot would guarantee “integrity, efficiency, and knowledge” from its years of experience with the British lottery.

 

Thompson said there could be a number of reasons for the switch to private management of the lottery.

 

"Do they believe they've had poor performance with their operations? Do they believe the casinos are taking business away from the lottery? Or, do they perhaps want to venture into internet gaming, and they think a private company, an outside company can do it best?" said Thompson. "Those answers all might be yes."

 

The Corbett administration has said that the “Pennsylvania Lottery performs well, but its performance could be maximized through a private management agreement.” The administration said it will look into Camelot's history for a background check before accepting the bid, which expires December 31. The Department of Revenue also said it would consider any alternate plan proposed by the lottery workers union.

The Pennsylvania Lottery was created in 1971. After expenses, all lottery revenues are dedicated toward programs that benefit older Pennsylvanians.