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UK firm expresses interest in running Pa. lottery

| Wednesday, Nov. 21, 2012, 12:29 a.m.

A United Kingdom firm submitted the lone proposal to privatize operations of the Pennsylvania Lottery.

Camelot Global Services proposed a 20-year plan that offers yearly increases in the lottery system's net revenues and would add online lottery games and Keno to the repertoire of instant-winner games and daily drawings.

Gov. Tom Corbett has said the state should privatize lottery operations if it would lower costs and benefit taxpayers by increasing revenues flowing to social service programs that help senior citizens pay for transportation, housing and prescription drugs.

The lottery reported net revenue of $1.06 billion in the 2011-12 fiscal year. Camelot's bid estimates an average profit of nearly $1.23 billion in the first year, rising to nearly $1.8 billion by the 10th year.

The company's pay would be capped at 5 percent of profits after incentives are included, said Elizabeth Brassell, state Department of Revenue spokeswoman.

Officials will evaluate the proposal by the end of the year, Brassell said. About 230 employees work for the Pennsylvania Lottery. Should Camelot win the contract, the state would keep about 70 employees and the rest would be able to interview with Camelot, Brassell said.

Lottery sales increased last fiscal year by 8.5 percent, and opponents of privatization, including Democratic lawmakers and the labor union that represents lottery employees, question why Corbett would want to pay a private company when sales are already increasing steadily.

“There is no good reason to dismantle the lottery,” said Dave Fillman, the executive director of AFSCME Council 13, which represents the employees.

Because there are no bidders, the state will compare Camelot's bid to historic and projected lottery performance data and hire risk-mitigation firm Kroll Advisory Solutions to investigate Camelot's reputation and financial stability.

Two other companies dropped out of the secretive bidding process. Brassell declined to identify them.

The Associated Press contributed to this story. Jeremy Boren is a staff writer for Trib Total Media. He can be reached at 412-320-7935 or jboren@tribweb.com.

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