Government & Politics
11:03 am
Wed January 9, 2013

Union Offers Counter-Bid For PA Lottery

The union representing some of the state Lottery’s employees has offered its own response to counter a bid by a Britain-based company looking to privatize the program.

The Corbett administration has maintained Lottery profits, which funds senior programs, are not growing in tandem with the state’s booming senior population.

Britain-based Camelot Global Services PA LLC put a bid on the Lottery late last year, claiming it could boost profits by $34 billion over the next 20 years – if additional games were added to the Lottery’s repertoire. On Tuesday afternoon a counter-offer was submitted by AFSCME Council 13, which represents about 170 Lottery employees.

The union’s Kristie Wolf-Maloney said the Lottery’s current public management could do even better than Camelot’s $34 billion – providing it could see new items on the Lottery menu.

“We’ve expanded Lottery games in the past, and by we, I mean our members and the Lottery folks,” she said. “There’s no reason we can’t do that in the future. If those expansions are found to be legal, there’s no reason that our folks, who have the knowledge and have the work experience can’t expand those games going forward.”

State lawmakers have claimed expanding games offered by the Lottery would require legislative action. The Corbett administration has said it has the authority to expand such games.

Elizabeth Brassell, spokeswoman for the state Department of Revenue, said her agency is still reviewing the AFSCME Council 13 proposal (the Department of Revenue oversees the Pennsylvania Lottery and has been in talks to privatize its operations).

Camelot’s bid expires Thursday. It has been extended once, but Brassell said it could be extended again.

Union representatives also attempted to poke holes in the terms of the potential agreement with Camelot, which would require the company to provide $150 million in cash collateral up front with the leasing of the Lottery operations. If Camelot doesn’t deliver on promised profits any given year, the state will be able to draw from that fund.

But AFSCME Council 13 said there’s a federally-mandated cap on withdrawals that would hamper the commonwealth’s access to the cash. The union’s subcontracting manager, Michael Fedor, said if profits were 10 percent under guaranteed levels one year, the commonwealth would not be able to make up the difference completely by withdrawing money from the collateral fund.

“So there’s this gap between the asserted profit guarantee and then the actual amount of money the commonwealth can withdraw, and so who pays the difference?” said Fedor. “That’s the question we have yet to have answered by the commonwealth.”

The union has long been a critic of privatization talks regarding the Lottery. Its director, David Fillman, said he still isn't completely sure how many current Lottery employees would keep their jobs under the pending privatization agreement with Camelot, though the commonwealth has said the private company would keep 70 employees.  Fillman added the Lottery’s games should be expanded to include things like Keno, but its operations don’t need to change hands to see more money for senior programs.  

“We’re looking at an outfit that’s going to try to make a profit,” said Fillman, who said Camelot would be reducing the percentage of profits reserved for senior program funding, while pocketing more of profits for management bonuses. “Just taking a look at what they’ve got on the table right now, it’s going to cost more just to run the operation than we do currently with the employees there.”