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Corbett won't pursue Pennsylvania Lottery privatization contract

Debra Erdley
| Monday, Dec. 30, 2013, 11:48 a.m.

Gov. Tom Corbett on Monday said that his administration will drop its effort to privatize management of the Pennsylvania Lottery.

The move caps a year in which two of Corbett's three priorities — public pension reform and liquor privatization — stalled in the Republican-controlled General Assembly. His push to boost transportation funding became reality, but in scaled-down legislation.

Corbett said he will continue to review lottery operations but did not delve into specifics.

“As we move forward, we will take what we've learned to make our successful lottery even better — expanding the player and retailer base, improving player loyalty and implementing strategies that will grow our lottery, responsibly and efficiently,” he said.

The governor appeared for an event at a nursing home in Gibsonia but did not mention the lottery, opting instead to announce his decision through a news release.

Corbett's office said it will not extend the life of a British company's roughly year-old bid to run the lottery, which Corbett said could have increased its profit by as much as $5 billion during a 20-year contract. Camelot Global Services Inc. sought the contract in return for a guarantee of at least $34.6 billion in profit to the state and the addition of the popular casino game keno.

A spokesman for Camelot said the decision was mutual and reflected “changes in the political and competitive environment.”

“We remain on good terms with the Commonwealth of Pennsylvania and are open to future possibilities,” said Alex Kovach, managing director of Camelot Global.

Lawmakers and lottery employees had objected to the plan when they learned Camelot was the sole bidder and that the deal included provisions to add keno to the lottery.

On Monday, Senate Minority Leader Jay Costa, D-Forest Hills, said he'd be willing to reconsider privatizing the lottery, provided the proposal involved multiple bidders, required transparency and accountability in operations, and protected the jobs of lottery employees.

“The governor flew solo on that the last time. Now we need to get the General Assembly in on the conversation,” Costa said.

Corbett sought his first extension on the Camelot contract in February, when state Attorney General Kathleen Kane ruled the agreement was unconstitutional. She said the administration sidestepped legislative approval of the deal, which was necessary because it would expand the lottery.

Corbett pushed it throughout the year, seeking extensions.

Auditor General Eugene DePasquale this month criticized Corbett, saying legal and consulting fees for the stalled deal likely would cost taxpayers about $4.6 million by year's end.

The lottery, begun in 1972, posts profit of just over $1 billion a year. During the past four decades, it has funneled $23.7 billion into programs for senior citizens, including property tax and rent rebates, and transit and prescription drug programs.

Though many lawmakers were at odds with the administration over the Camelot contract, few disputed the need to expand lottery profit as the state's population ages.

House Democratic leaders hailed Corbett's announcement and reiterated their stand against privatization.

“The Pennsylvania Lottery is one of our strongest assets as it continues to set records for ticket sales and profits. That's because of the creative and dedicated people who make it work and the loyalty of ticket purchasers. In the best interest of older Pennsylvanians, we should keep the lottery in place and build on what has been proven to work,” House Minority Leader Frank Dermody, D-Oakmont, said in a statement with Democratic Whip Mike Hanna, D-Lock Haven, and Appropriations Committee Minority Chairman Joe Markosek, D-Monroeville.

A spokesman for Senate Majority Leader Dominic Pileggi, R-Chester, said the Senate will take up privatizing and expanding the lottery in hearings.

“We think it's still very much an issue worthy of exploration,” said Pileggi spokesman Erik Arneson.

Debra Erdley is a Trib Total Media staff writer. Reach her at 412-320-7996 or derdley@tribweb.com.

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