Corbett administration delays deadline for lottery bid
By Brad Bumsted
Published: Monday, December 31, 2012, 1:50 p.m.
Updated: Wednesday, January 2, 2013
HARRISBURG — The Corbett administration on Monday said it would extend the time period to consider a bid from a multinational company to privatize management of the $3.5 billion-a-year Pennsylvania Lottery.
The bid from Camelot Global Services, set to expire at midnight Monday, now would expire Jan. 10, the Department of Revenue said. Camelot, which runs the United Kingdom's National Lottery, submitted a bid saying the state would reap $34 billion in profit over 20 years.
If the company fails to meet projections, the state could draw from a $200 million pool of money Camelot must front — a $50 million “bid security” fund, from which consulting fees would be paid, and $150 million up-front cash collateral, Revenue spokeswoman Elizabeth Brassell said.
A top political adviser to Republican Gov. Tom Corbett, meanwhile, said he mistakenly remains listed as a lobbyist for a consulting company involved in the lottery deal because he did not update his listing with the Department of State.
Brian Nutt, who was Corbett's chief of staff in the Attorney General's Office, said it is his mistake that the department's website lists him as a lobbyist for Greenhill and Co. of New York City. Former Democratic Gov. Ed Rendell works for Greenhill but has said he was not involved in lottery discussions.
Nutt said he registered as a lobbyist as a precaution. He said he provided advice to the consulting firm on a privatization innovation task force Corbett set up in 2011. Corbett had asked Greenhill to help identify opportunities for privatizing state assets.
“I have not done any of the work for them (on the lottery) or lobbying,” Nutt said. “There was nothing specific as relates to the lottery.”
Corbett spokesman Kevin Harley said he had no comment and was not aware of Nutt's work for Greenhill.
The administration hired Greenhill in December to work on the lottery deal. The company and a law firm stand to make millions if the deal goes through, Brassell said. She said fees for consultants are capped at $30 million.
“Greenhill is the financial adviser for the project, and DLA Piper is the legal adviser,” Brassell said. “Those are the only two contracted advisers the commonwealth has, but each of those advisers may have subcontractors that will be paid out of the bid security.”
Camelot is represented by lobbyists from the prominent firm of Greenlee Partners, which has offices in Harrisburg, Philadelphia and Pittsburgh, and State Street Strategies in Harrisburg. It hired David La Torre as a Pennsylvania-based spokesman.
The bid extension provides time for a counterproposal to lottery privatization by AFSCME Council 13, which represents state workers, and time for a final report on the suitability of Camelot as a potential private manager, the Revenue Department said. Three companies initially bid for the contract, but two dropped out. The administration won't identify the other companies.
The union must submit its plan by Jan. 8.
David Fillman, Council 13's executive director, said he's baffled by the choice of Jan. 10 as the new deadline, because it falls before a scheduled Jan. 14 Senate hearing at which the administration promised to answer questions about the proposal.
“It's just kind of a slap in the face to the Senate hearing,” he said.
Fillman said he was unaware of Nutt's prior involvement with Greenhill. “Unfortunately, it doesn't surprise me,” he said.
AFSCME has filed suit to block the lottery privatization. The union will make a counterproposal, Fillman said.
The lottery is the only one of its type in the nation that sends all proceeds to senior citizen programs such as low-cost prescription drugs, free transit and rebates on real estate taxes and rent. Corbett has said the growth of Pennsylvania's elderly population will strain those programs without new revenue.
The lottery plan caused friction between Corbett and even some GOP legislators because Camelot's proposed profits would include new revenue from keno games, which people could play at terminals in restaurants and bars.
Some lawmakers view that as an extension of legalized gambling. Revenue Secretary Dan Meuser has said the department's legal advisers believe the agency has clear authority to begin keno games.
Brad Bumsted is state Capitol reporter for Trib Total Media. Reach him at 717-787-1405 or email@example.com.
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