Pennsylvania Lottery could be run by private company if a business meets the state's terms
State officials on Friday released the terms they would require for a private company to run the Pennsylvania Lottery and possibly expand to Internet games and Keno.
Gov. Tom Corbett is moving toward a plan that would hire a company to manage the lottery for 20 years with the chance to extend that for 10 years in exchange for guaranteed annual profits.
“We are looking into privatization. A final decision hasn't been made,” Corbett said.
The governor said he has believed from “day one” of his term that the state should privatize where it benefits taxpayers. If the lottery plan increases revenue, Corbett said, the state has an obligation to look into it.
“If privatization of the lottery would mean a loss of revenue, it won't be done,” said Corbett, whose discussions with lawmakers became public in April.
State Democratic leaders lined up against the plan, saying they want to see proposals and proof that such a move would benefit the state.
“We'd like to know why we're even talking about this. The lottery is making record profits. Why take those profits and give them to shareholders instead of senior citizens?” asked Frank Dermody, D-Oakmont, the House minority leader. “It's a solution in search of a problem. You have a for-profit enterprise that's going to take money off the top. The profits have to come from somewhere.”
Jay Costa, Senate Democratic leader from Forest Hills, criticized the closed-door negotiations.
“The people of Pennsylvania, especially our seniors, deserve an open and transparent process complete with legislative input and oversight,” Costa said in a prepared statement.
The lottery reported $3.48 billion in sales in the 2011-12 fiscal year, its most ever and an increase of 8.5 percent over the previous year. After prizes and expenses, net revenue was $1.06 billion, an increase of about 10.4 percent.
That money goes to programs for seniors, including a property tax and rent subsidy, transit, prescription drugs, senior centers and long-term care services.
The key terms of the state's plan require the private company to pay $150 million in upfront cash to act as a guarantee for future revenue. The contract would guarantee the state a certain amount; if the company did not meet that in any year, the state would make up the difference from the $150 million.
Elizabeth Brassell, spokeswoman for the Department of Revenue, which runs the lottery, said the plan would provide a predictable revenue stream even in years when the lottery does not meet revenue projections. The state will add Keno even if it doesn't hire a private company, she said.
“The senior population is growing and the lottery funds programs for the elderly. We need to grow the lottery funding of those programs,” Brassell said. “We're looking to what new ideas (private management) has and if they can do it better, faster and cheaper. The contract will not be entered into unless it delivers significantly higher incremental profit growth.”
Brassell declined to say how many and which businesses have submitted plans.
After the state approves the business plans, it will ask those companies for bids, she said.
Staff writer Brad Bumsted contributed to this report. Bobby Kerlik is a staff writer for Trib Total Media. He can be reached at 412-320-7886 or firstname.lastname@example.org.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- God is touchy topic in ICU, Pitt study finds
- Bryant suspension opens doors for other Steelers’ receivers
- Two wild-card format hurting Pirates in short term
- Daughter’s generosity lives on in family
- Trib 30 takes bigger hit than Dow in August
- Potential suspension of Pennsylvania AG’s license unusual
- Pitt defense is entering new season with something to prove
- Starkey: The kick returner and the grizzly bear
- Junior class filled with potential for talent-laden Frazier football team
- Popularity of emerging markets wanes
- Two Cal U students charged in altercation