As the Corbett administration pursues private management of the Pennsylvania Lottery at breakneck speed, the old adage, “If it ain’t broke, don’t fix it,” comes to mind.
The 41-year-old lottery has been a great success story. Since 1972, the lottery has raised $27.6 billion for vital senior citizens programs ranging from PACE prescription drug assistance to the Property Tax and Rent Rebate Program.
Lottery sales and overall performance have managed to grow and meet an ever-expanding need year after year.
Last year alone, the lottery generated $3.48 billion in sales, reaping more than $1 billion in profits – all dedicated to senior citizen programs, which was an increase of more than 10 percent from the previous year.
The lottery managed to achieve these record sales despite increased competition from casinos and other gaming offerings across our state.
Without question, the lottery is one of the most well- run, efficiently operated agencies in all of state government.
With this record of success, why has our governor been quietly seeking to outsource the lottery’s management, and hurry this closed-door process along with little public review or legislative scrutiny? The governor stated that he wants a private operator in place by the beginning of January.
Making matters worse and adding to a laundry list of already-legitimate suspicions about this privatization process, we now learn that only one firm has bid to run our lottery.
Citing concerns about the terms of the private management agreement and the process, two other potential bidders bowed out in August and November, leaving Britain-based Camelot as the sole bidder.
This lack of competition raises serious issues about the model the Corbett administration has chosen to solicit privatization proposals and begs the question of whether Camelot’s bid reflects the best deal we can get if we are going to continue down this misguided path.
While I am always open to reasonable ideas for improving efficiency or generating more lottery sales, it is imperative that we examine changes to our lottery carefully. The programs funded by the lottery are virtual lifelines for many senior citizens.
Proceeding cautiously seems like good advice when one reviews the performance of lottery privatization in other states. The private company running the Illinois lottery missed its revenue goals by nearly $100 million.
Making matters even worse, the Illinois inspector general is now investigating irregularities and questionable procedures in the procurement process used to hire that state’s private manager.
That’s not all. The governor’s plan raises additional red flags.
One aspect of the proposal would allow Internet gaming. While this could increase lottery profits, this form of gaming could threaten dollars now generated by the commonwealth’s casinos, which are primarily used for property tax relief.
Additionally, the governor has not indicated if his privatization plan would allow a management company to simply decrease the current odds of winning to increase revenues.
Furthermore, unless a private operator is willing to guarantee Pennsylvania more than 10 percent growth in profits year-over-year, I see no reason to privatize a system that would only siphon our senior citizens’ lottery proceeds to their corporate coffers.
If the governor insists on going down the privatization road, it is imperative that the Legislature insist on steps to safeguard our senior citizens’ programs, enforce proper oversight and give the public a good open look at how the governor’s privatization scheme would unfold.
To date, there are far more questions than answers. With the safety and security of our seniors at stake, privatization may not be a gamble worth taking.
State Sen. Richard A. Kasunic of Dunbar, Fayette County, is a Democrat whose 32nd district includes parts of Somerset and Westmoreland counties.