Kathleen Kane's conundrum
By Brad Bumsted
Published: Saturday, Jan. 26, 2013, 9:00 p.m.
Reviews of pending state contracts by the attorney general are usually pro forma. But one of new Attorney General Kathleen Kane's first major decisions is reviewing the mega-contract to farm out the management of the state lottery to a British company with $34 billion at stake.
Normally the reviews are for “form and legality.” In the vast universe of state contracts awarded, major legal issues are few and far between.
Kane, a Democrat, gets to decide whether a carefully developed contract by the GOP Corbett administration awarding the lottery privatization contract will stand. Regardless of what she decides — fairly or not — it will look political.
Corbett downplayed it when asked about Kane's review, suggesting the review is routine.
In this case, there are outstanding legal issues, according to Senate Republicans, Senate and House Democrats, state Treasurer Rob McCord and the union representing state lottery workers.
Democrats in the Legislature contend the contract is illegal because it's an end-around of the Legislature to allow keno games in taverns and clubs.
McCord has said he might not pay the contractor, Camelot Global Services PA, if he determines keno needs legislative approval.
In a recent letter to Corbett, Senate Republicans didn't question the governor's ability to approve keno in the contract but took it a step further, saying spinoff games simulating casino action would affect the state's casino industry. They asked that the contract be rewritten.
The arguments from any of the above parties would provide Kane with a plausible reason to reject the contract.
If she rejects it, it will seem like one of her first major decisions was to tank a GOP governor's initial step into privatization. That won't hurt her in the Legislature, where it is generally unpopular.
Corbett argues he is pursuing the privatization to boost lottery revenues for senior programs, which will be stretched thin as more baby boomers move into senior status. He'll be able to maintain, at least, that Kane is standing in the way of that protection for the elderly.
Yet the lottery without Camelot provided $1 billion to senior programs last year.
If a delay persists, Camelot could walk.
There are some who think approving the contract would show Kane to be nonpartisan — important when you know she will be taking a major whack at Corbett later this year after concluding an investigation of how Corbett, as former attorney general, handled the 33-month Jerry Sandusky investigation.
An approval would make a lot of Democrats in the Legislature unhappy right off the bat.
One factor that might come into play: Greenhill & Co., the investment banking firm that brought Camelot into the project, might not have its multimillion-dollar pay day if the contract is rejected.
Former Democrat Gov. Ed Rendell, still a potent fundraiser and player in Philadelphia, works for Greenhill. He and the company say he is removed from this project. Still, he would undoubtedly like to see Greenhill continue to prosper.
There are pros and cons both ways for Kane.
Brad Bumsted is the state Capitol reporter for Trib Total Media (717-787-1405 or firstname.lastname@example.org).
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