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AFSCME says contracting lottery to overseas company 'defies logic'

| Wednesday, Jan. 9, 2013, 12:24 a.m.

HARRISBURG — Privatizing management of the state's $3.5 billion-a-year lottery is a “complex and highly risky” proposal, the union representing 175 state lottery employees said Tuesday.

The American Federation of State County and Municipal Employees Council 13 filed its counterproposal to stave off privatization, saying it ”defies logic” to bring in a British company to do what lottery workers do for less.

The lottery is capable of aggressive campaigns to boost revenue, the union said. Its proposal is allowed under its collective bargaining agreement with the state, which has 10 days to consider it.

Elizabeth Brassell, a spokeswoman for the Department of Revenue, which oversees the lottery, said she would not comment until the department reviews the plan.

Republican Gov. Tom Corbett is considering a bid from Camelot Global Services, which promises $34 billion in profit over 20 years, to run the lottery and increase money for senior citizen programs. The lottery pays for low-cost prescription drugs and rebates on rent and property tax.

“Camelot has put forth a bid that would guarantee the economic future for senior programs, while transferring risk from taxpayers to the private sector,” said a statement issued by spokesman David La Torre. “ It is truly a win-win and is backed by $200 million of guaranteed money. The proposal put forward (by the union) is based on targets. Not a single dollar is guaranteed.”

Anticipated growth of Pennsylvania's senior population during the next decade will require more money to maintain programs, Corbett has said.

State programs the Legislature and governors added have expanded at twice the rate of lottery funding, the union said. That's partly why problems might occur down the road, said Kristie Wolf-Maloney, a union official.

The addition of keno terminals in bars and restaurants is one way that Camelot, which runs the United Kingdom's National Lottery, would boost profit. That presents a potential showdown with the Legislature, which believes it should OK any expansion of legalized gambling.

The union does not object to adding keno games, said David Fillman, executive director of AFSCME Council 13.

“We think we are capable of providing that service,” Fillman said.

The union contends the 42-year-old lottery during the past two decades developed an “over-reliance” on instant games. Those games have lower profit margins than terminal games such as The Daily Number, Powerball and Mega Millions. The union proposed shifting to more terminal games.

The state and Camelot extended consideration of the company's bid to Thursday; another extension is possible, state officials said.

The council has a lawsuit pending to block the privatization proposal. The state Senate is scheduled to hold a hearing on the proposal Monday.

The union was unable to determine how much profit Camelot would reap from a management contract, said Michael Fedor, a union official.

Brassell said that depends on the profit Camelot produces for the state.

Brad Bumsted is state Capitol reporter for Trib Total Media. He can be reached at 717-787-1405 and bbumsted@tribweb.com.

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