The Tribune Democrat, Johnstown, PA

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January 11, 2013

State taps British firm to run $3.5B state lottery

HARRISBURG — Camelot Global Services, the British national lottery operator, is poised to take over management of the $3.5 billion Pennsylvania Lottery after a top official in Gov. Tom Corbett's administration told employees Friday that it has awarded a contract to the company.

That puts Pennsylvania on track to become the third state, after Indiana and Illinois, to hire a private lottery manager.

"We're confident that by combining one of the nation's best lotteries with one of the best private-sector lottery industry experts in the world, we'll end up with a win-win proposition to grow and protect Lottery profits for decades to come," Secretary of Revenue Dan Meuser told employees in the email obtained by The Associated Press.

The Pennsylvania Lottery is one of the nation's largest. Camelot was the sole bidder for the contract.

Administration officials have maintained that Camelot's commitment of $34 billion in lottery profits over 20 years is a better deal than state employees could deliver as the state eyes growing demand for state services for the elderly that are underwritten by the lottery. Critics including state Treasurer Rob McCord and the union representing state lottery employees say Camelot would increase lottery profits largely by an expansion of lottery gambling that they contend is not currently allowed by state law.

David Fillman, the union's executive director, called it "a bad deal for our seniors."

The union claims the current system could outperform Camelot's projections if it were allowed the same gambling expansion the company proposes.

Meuser told employees that the contract has been formally awarded, but Camelot cannot begin work until the contract receives final reviews and signatures required for execution. That is expected to happen next week, he said.

"Following bid execution, Camelot team members will immediately start observing Lottery operations and meeting and interacting with all of you to learn from you and get to know you," Meuser said in the email.

Bringing the process to a successful conclusion is a key test on privatization for Corbett, who promised when he ran for governor that he would look to privatize state services. In addition, securing the contract gives Camelot its biggest footprint yet in the United States.

However, challenges await the Republican governor's agreement with Camelot.

The union, Council 13 of the American Federation of State, County and Municipal Employees, is suing to block an agreement with Camelot and has filed a grievance and an unfair labor practice charge. The lawsuit challenges the governor's authority to privatize the lottery's management and expand the scope of lottery gambling that is contemplated by Camelot.

Meanwhile, state Treasurer Rob McCord is warning that he may not approve payments to Camelot unless he is satisfied that its planned gambling expansion is authorized by state law.

Spokespeople for Corbett and Meuser did not immediately return messages Friday.

Criticism of secrecy has followed the Corbett administration's negotiations with Camelot. For instance, the business plan Camelot submitted to the Corbett administration remains confidential.

On Monday, Meuser, Camelot executives and representatives of AFSCME and the AARP are expected to testify on the matter before the state Senate Finance Committee.


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