Pa. Lottery outsourcing critics say Illinois’ failed privatization could have played out here

Source: Jan Murphy, pennlive.com, August 25, 2014

After three years of revenues falling short of expectation, Illinois is parting ways with the private management firm it hired in 2010 to run its state lottery. The news of Illinois’ decision to divorce Northstar Lottery Group announced on Friday struck a chord with a Pennsylvania labor union official and others who had been critical of a similar pursuit by Gov. Tom Corbett to hand over the reins of the Pennsylvania Lottery to a private management firm. Corbett abandoned that privatization pursuit, at least for the time being, when he announced at the end of 2013 that he was allowing a bid from United Kingdom-based Camelot Global Services to expire after extending it eight times over the course of a year. That decision came after Attorney General Kathleen Kane raised constitutional and legal objections about the proposed contract with Camelot….
Related:
Editorial – Bet on politics: The new lottery director has scant expertise
Source: Pittsburgh Post-Gazette, January 15, 2014

When the Corbett administration was promoting its now-abandoned idea of privatizing the Pennsylvania Lottery, it was on the basis of not only bringing private enterprise know-how to its operations but also special expertise in gambling. As explained a year ago by Revenue Secretary Dan Meuser, in an email to lottery workers informing that a British firm, Camelot Global Services, would soon be signing a contract: “We’re confident that by combining one of the nation’s best lotteries with one of the best private-sector lottery industry experts in the world, we’ll end up with a win-win proposition to grow and protect lottery profits … .” Now it’s on to other things, such as filling the vacant position for the lottery’s new executive director. On Monday, Silvan B. Lutkewitte III, 50, of Hershey took up the position, replacing Todd Rucci, who left in November for another job. In picking Mr. Lutkewitte to head the lottery instead of conducting a national search, did the administration put the same premium on gambling expertise as it did in its privatization efforts? …

Corbett feeling lucky about lottery privatization
Source: Mary Wilson, WITF, January 6, 2014

The Corbett administration let a private firm’s bid to manage the Pennsylvania Lottery expire at the end of December, but that doesn’t mean the governor feels down on his luck about privatizing the enterprise eventually. State senators last month began considering legislation that would allow the governor’s plans to advance. A measure under discussion would pave the way for an expansion of lottery games and outsourcing the lottery’s management to a private company.

Lottery workers union ‘pleased’ with end to privatization effort
Source: Robert J. Vickers, pennlive.com, December 30, 2013

State lottery workers breathed a sigh of relief Monday after Gov. Tom Corbett appeared to give up on a two-year effort to privatize the management of the Pennsylvania Lottery. “Right now we’re just pleased they’re keeping everything in-house,” said David Fillman, executive director of AFSCME Council 13, the union that represents about 170 employees of the state lottery. Earlier in the day, Corbett issued a news release indicating that he would not pursue a ninth extension on the lottery management bid from UK-based Camelot Global Services.Although he said he would allow the lottery to run as-is, and a state aging official said the move wouldn’t immediately harm commonwealth seniors, another administration official said future privatization efforts could be on the cards….

Related:
Pa. lottery manager effort has clear path
Source: Karen Langley, Post-Gazette, December 4, 2013

A tentative agreement between the Corbett administration and a union representing state workers appears to have breathed new life into the governor’s effort to hire a private manager for the Pennsylvania Lottery. A 20-year management agreement with Camelot Global Services, which operates the United Kingdom’s lottery, has been stalled since February, when Attorney General Kathleen Kane announced that attorneys conducting a routine review of contracts had concluded the deal would violate state law. …

AFSCME warming up to outsourcing of Pennsylvania Lottery’s management
Source: Jan Murphy, pennlive.com, December 4, 2013

The most vocal critic of Gov. Tom Corbett’s proposed privatization of the Pennsylvania Lottery’s management may be backing off its opposition. …

Privatizing Pa. Lottery doesn’t add up
Source: Mercury, November 1, 2013

From the outset, Gov. Tom Corbett’s proposed privatization of the state lottery was ill-fated. And for good reason: It was a bad idea. It’s bad public policy. It’s bad for state taxpayers. It’s bad for the senior citizens who depend on lottery funds to pay for transportation, meals, prescription drugs and property tax and rent rebates. But now we learn the governor’s quixotic quest — guided by ideology more than practicality — hasn’t been bad for everyone. Consultants have hit the jackpot. …

Auditor General Eugene DePasquale calls on Corbett to stop spending on lottery privatization consultants
Source: Jan Murphy, pennlive.com, October 29, 2013

State Treasurer Rob McCord may have reluctantly decided to pay the more than $3.4 million in bills associated with Gov. Tom Corbett’s exploration of privatizating the Pennsylvania Lottery’s management, but that is not going to stop state Auditor General Eugene DePasquale from giving them another once over. In a news release issued Tuesday, DePasquale said he directed his staff to immediately begin to review and scrutinize this diversion of use of Lottery Fund dollars from funding senior programs to paying for consultants. …

Auditor General DePasquale Will Scrutinize Payments of Lottery Funds Diverted to Firms Associated with Stalled Privatization Effort
Source: Commonwealth of Pennsylvania, Department of the Auditor General, News Release, October 29, 2013

Auditor General Eugene DePasquale today released the following statement on the commonwealth’s diversion of more than $3.4 million to firms associated with the Corbett Administration’s effort to privatize the Pennsylvania Lottery: “I directed Department of Auditor General staff to immediately begin to review and scrutinize the Corbett Administration’s diversion of more than $3.4 million in Lottery funds to firms associated with a still-pending contract with the British-owned Camelot Global Services Inc. to privatize the Pennsylvania Lottery management. “Funds from the Pennsylvania Lottery are supposed to help older Pennsylvanians with prescriptions, transportation, home-delivered meals and property tax and rent rebates, not to fatten the coffers of law firms and private consultants over a Lottery privatization contract that may never see the light of day…

2 State Senators Want Corbett to End Lottery Privatization Bid
Source: Kevin Gavin, WESA, October 7, 2013

Two Democratic state senators want Gov. Tom Corbett to pull the plug on his efforts to privatize Pennsylvania’s Lottery and turn his attention to what they say are more pressing issues including transportation funding, Medicaid expansion and education funding.

UK-based Camelot Global Services’ original bid to operate Pennsylvania’s Lottery was to expire at the end of 2012, but the Corbett administration and the company agreed on an extension of the offer. A contract was then finalized Jan. 16 which called for Camelot to give the state $34.6 billion over 20 years. In exchange Camelot would be allowed to increase the gaming options including Keno.

However, 30 days later state Attorney General Kathleen Kane rejected the contract Thursday on the grounds it violates the state constitution and state law. Since then the administration and Camelot have been agreeing to extensions to give the administration more time to “refine contract language.”

The latest extension, the 10th, is set to expire Oct. 29. Sen. Tim Solobay (D-Washington) says there is no public demand for privatization…

Pa. Lottery should not follow Illinois path, lottery outsourcing opponents say
Source: Jan Murphy, pennlive.com, July 23, 2013

…An official from the labor union representing Pennsylvania Lottery employees and Democratic lawmakers have taken notice of how the situation is unfolding in Illinois. They suggest that should serve as yet another reason why Corbett should halt his pursuit of hiring United Kingdom-based Camelot Global Services to manage the Pennsylvania Lottery. In its bid, Camelot committed to generating $34.6 billion in profits over the next 20 years that would be used exclusively to fund the senior citizens’ programs. The Corbett administration estimates that is $3 billion to $4.5 billion more than the lottery would produce by keeping its management in-house. Camelot’s bid is currently set to expire on July 31….

Pa. Lottery privatization costs don’t cut profits, Revenue spokeswoman says
Source: Jan Murphy, pennlive.com, July 19, 2013

The record profits that the Pennsylvania Lottery earned last year do not include the more than $3.5 million that Gov. Tom Corbett’s administration has spent or expects to spend on its exploration of tapping a private company the lottery. A spokeswoman for the Department of Revenue said, however, it would be wrong to assume that had those costs not been incurred, it would have driven up last year’s profits even higher. The lottery reported a record $1.067 billion in profits…. The lottery’s annual report for the period covering July 1, 2012 to June 30 shows the lottery hit an all-time ticket sales record of $3.48 billion, which is 6.3 percent more than the prior year’s record-setting performance….

Lottery privatization pursuit continues despite approaching record-breaking profits
Source: Jan Murphy, pennlive.com, May 20, 2013

Despite a trajectory that shows Pennsylvania Lottery profits on course to break the past year’s record-breaking performance, Gov. Tom Corbett’s administration has not abandoned its effort to privatize the lottery’s management. Administration officials have been working with consultants and lawyers to revise the contract that Attorney General Kathleen Kane rejected in February, because she determined it was unconstitutional….

PA Lottery privatization deal questioned by third state agency
Source: Associated Press, April 15, 2013

A third state agency is pointing to potential legal problems in Governor Corbett’s stalled plan to hire a British company to manage the $3.5 billion Pennsylvania Lottery. The chief counsel of the Pennsylvania Gaming Control Board wrote in a letter last month that the proposed contract is too ambiguous to tell what kinds of new gambling it would allow. As a result, the lawyer, Douglas Sherman, says it’s impossible to say whether it infringes on state casino gambling laws.

Corbett’s lottery privatization tab for consultants nears $3 million
Source: Jan Murphy, pennlive.com, April 2, 2013

Senior citizens may stand to pay a substantial cost in lost services if Gov. Tom Corbett’s effort to privatize the Pennsylvania Lottery’s management goes nowhere. Already, the costs of the consultants hired to assist the Corbett administration in that endeavor exceed $2.85 million, said Elizabeth Brassell, a spokeswoman for the Department of Revenue, which oversees the lottery. Unless another funding source is found, that money will come out of the lottery profits that are used to pay for senior programs, she said.

To understand the impact that would have if it came out of the lottery fund, information available from the state indicates that $2.85 million is enough to:
– Assist seniors in paying for 137,681 prescriptions through the PACE and PACENET programs,
– Pay for 1.1 million free transit rides for seniors,
– Provide 6,055 rebates through the state’s property tax and rent rebate programs, or
– Cover 576 months of nursing home care, the equivalent of paying the tab for 48 people to stay in a nursing home for a year….

Pennsylvania lottery deal being revised to address attorney general’s concerns
Source: Karen Langley, Pittsburgh Post-Gazette, March 16, 2013

…With an appeal to the courts due today, the governor’s office announced late Friday it would revise the contract “in order to provide clarification to the attorney general.” The attorney general had raised three objections to the contract: that it infringes on the Legislature’s power to make policy; that state lottery law does not allow monitor-based games, like keno; and that it included too broad a provision for Camelot to make claims against the state. The administration does not plan to remove keno or other components of the contract, but rather to demonstrate that the agreement is lawful….

Treasurer Rob McCord favors expanding lottery before looking to privatize its management
Source: Jan Murphy, pennlive.com, February 20, 2013

…At a Senate budget hearing, McCord suggested the administration would have done better had it had an open conversation with the Legislature about expanding the lottery to include terminal-based games such as keno at the same time it was looking at the idea of privatizing the lottery’s management….

Attorney General Kathleen Kane says Gov. Tom Corbett overstepped his constitutional authority in signing the lottery contract
Source: Jan Murphy, pennlive.com, February 14, 2013

Attorney General Kathleen Kane says Gov. Tom Corbett overstepped his authority in signing a contract with Camelot Global Services PA, LLC to take over management of the Pennsylvania Lottery. But that wasn’t the only reason she rejected it. She cited the state lottery act, the gaming act and other applicable case law as reasons why the contract didn’t meet her test for form and legality….

Toohil backs Kane on lottery contract block
Source: Kent Jackson, citizensvoice.com, February 19, 2013

AFSCME Urges Gov. Corbett To Negotiate With PA Employees On Lottery Proposal
Source: AFSCME Council 13, February 19, 2013

Costa, Blake to Gov: Let Lottery Implement AFSCME Approach to Raise Profit
Source: State Sen. John Blake, Press Release, February 11, 2013

State Sens. Jay Costa (D-Allegheny) and John Blake (D- Lackawanna/Luzerne/Monroe) said that instead of outsourcing the Pennsylvania Lottery’s operations to a U.K. company, Camelot Global Services, the governor should allow the Lottery to implement AFSCME’s recommendations to raise new revenue….

Poll: Voters say don’t privatize lottery management
Source: Borys Krawczeniuk, Scranton Times Tribune, February 7, 2013

Pennsylvania voters overwhelmingly think privatizing management of the state lottery is a bad idea, with some saying they’ll no longer play if that happens, according to a new Franklin & Marshall poll released Wednesday…Fewer than one in five voters (18 percent) said they either strongly or somewhat favor Gov. Tom Corbett’s plan to hand off management of the lottery to a private company. Almost two-thirds (64 percent) either somewhat or strongly oppose privatization….

AFSCME adds new arguments in its lottery privatization lawsuit
Source: Jan Murphy, pennlive.com, February 04, 2013

…The American Federation of State, County and Municipal Employees Council 13 on Thursday amended its lawsuit in Commonwealth Court to provide two additional reasons why it thinks the court should stop the administration’s outsourcing of the lottery’s management….

Corbett Gives U.K. Firm 20-Year Pennsylvania Lottery Deal
Source: Romy Varghese, Bloomberg, January 17, 2013

Pennsylvania Governor Tom Corbett handed the management of the state’s $3.48 billion lottery to the company that runs Britain’s National Lottery. Disregarding criticism from Democratic lawmakers and a union representing lottery workers, Corbett awarded the 20-year contract yesterday to Camelot Global Services PA LLC, which is part of U.K.-based Camelot Group Plc. The attorney general’s office received the contract yesterday and will have 30 days to review it, Eric Shirk, a spokesman for the governor, said by e- mail. …

Inside the Bid to Privatize the PA State Lottery
Source: Randy LoBasso, PhillyNow blog, January 15, 2013

British firm wins Pennsylvania Lottery management
Source: Paul J. Gough, Pittsburgh Business Times, January 14, 2013

It’s official: Pennsylvania will become the third U.S. state to have a private firm run its lottery. Camelot Global Services, which also runs the British lottery, will pay $34 billion over the next 20 years to run the Pennsylvania Lottery. …

Pennsylvania lottery workers’ union pitches own plan
Source: Laura Olson, Post-Gazette, January 9, 2013

Arguing that the state is comparing “apples to screwdrivers” in weighing a private company’s plan for boosting state lottery profits against the projected performance of public employees, a union representing lottery workers says it can beat the bid. In a proposal submitted Tuesday to Gov. Tom Corbett’s administration, the American Federation of State, County and Municipal Employees Council 13 contends that the bid from Britain-based Camelot Global Services PA LLC would provide less funding for seniors programs and too little security against missing its profit margins. …

Union fights effort to privatize Pa. Lottery
Source: Amy Worden, Philadelphia Inquirer, January 9, 2013

Unionized employees make Pa. Lottery pitch
Source: Marc Levy, Associated Press, January 9, 2013

Union say lottery privatization could be costly
Source: Melissa Daniels , Watchdog.org, January 8, 2013

Pennsylvania Lottery privatization Q&A: Secretaries of aging and revenue discuss Camelot Group bid3
Source: John L. Micek, Morning Call, January 8, 2013

…. Pennsylvania Revenue Secretary Dan Meuser and Aging Secretary Brian Duke took a few minutes to talk about the proposed privatization and the bid submitted by a North American subsidiary of the Camelot Group, which runs the National Lottery in the United Kingdom….

Corbett may hold hearings on privatizing the state lottery
Source: Laura Olson, Pittsburgh Post-Gazette, December 20, 2012

Lawmakers, union tiring of ‘secret’ talks on lottery privatization
Source: Mark Shade, Times Online, December 14, 2012

Editorial: More questions than answers in lottery deal
Source: Dave Fillman, Times-Tribune, December 16, 2012

State’s financial adviser doesn’t hide connection to only bidder for Pennsylvania lottery
Source: Jan Murphy, Patriot-News, December 06, 2012

A firm hired to advise Gov. Tom Corbett’s administration in its pursuit of privatizing the Pennsylvania Lottery management is no stranger to the company interested in taking over the lottery. The state’s financial adviser, Greenhill & Co., worked on the $576 million sale of the Camelot Group to its present owner, the Ontario Teachers’ Pension Plan, in 2010. One of Camelot’s companies, Camelot Global Services PA, was the only firm to submit a bid to take over running the state’s $3 billion-plus lottery enterprise for the next 20 to 30 years. Now both Greenhill, which has a financial incentive in its contract if the lottery’s management goes private, and Camelot stand to make millions if Corbett signs the privatization deal.

Pa. Auditor General-elect Eugene DePasquale questions the urgency in the Corbett Administration’s lottery management privatization discussion
Source: Jan Murphy, Patriot-News, December 06, 2012

Pa. House Democratic lawmakers blast away at Gov. Tom Corbett’s lottery privatization proposal
Source: Jan Murphy, Patriot-News, December 03, 2012

More questions than answers on lottery privatization
Source: Sen. Richard Kasunic, Daily American, November 29, 2012

…Last year alone, the lottery generated $3.48 billion in sales, reaping over $1 billion in profits – all dedicated to senior citizen programs, which was an increase of over 10 percent from the previous year. The lottery managed to achieve these record sales despite increased competition from casinos and other gaming offerings across our state. Without question, the lottery is one of the most well run, efficiently operated agencies in all of state government.

With this record of success, why has our governor been quietly seeking to outsource the lottery’s management, and hurry this closed-door process along with little public review or legislative scrutiny? The governor stated that he wants a private operator in place by the beginning of January.

Making matters worse and adding to a laundry list of already legitimate suspicions about this privatization process, we now learn that only one firm has bid to run our lottery. Citing concerns about the terms of the Private Management Agreement and the process, two other potential bidders bowed out in August and November, leaving British-based Camelot as the sole bidder. This lack of competition raises serious issues about the model the Corbett administration has chosen to solicit privatization proposals and begs the question of whether Camelot’s bid reflects the best deal we can get if we are going to continue down this misguided path…..

Pa. unveils $34B, 20-year bid to privatize lottery
Source: Marc Levy, Associated Press, November 21, 2012

The Britain-based company that runs the national lottery in the United Kingdom is pledging to produce more than $34 billion in profits over 20 years if it wins a contract to manage the Pennsylvania Lottery, Gov. Tom Corbett’s administration said Tuesday as it moves toward privatizing the state’s $3.5 billion system. The administration said it will weigh the offer by Camelot Global Services, which it said is good until Dec. 31, and is the only one it said it will receive after two other companies that it would not identify dropped out.

Privatize the lottery? Corbett administration moves forward with efforts
Source: Nick Malawskey, Patriot-News, November 09, 2012

As lottery privatization decision looms, another state offers advice
Source: Megan Lello and Radio Pennsylvania, WITF, August 8, 2012

Pennsylvania is currently looking into privatizing its lottery. But one official with the Illinois lottery, the only private system in the nation, is warning the commonwealth to carefully plan how it would choose a company to manage day-to-day operations.

Could the Pennsylvania lottery be privatized?
Source: Jan Murphy, Patriot-News, June 16, 2012

PA Lottery latest target in privatization campaign
Source: Mary Wilson, WITF, April 2, 2012

Pennsylvania exploring lottery privatization
Source: John L. Micek, Morning Call, April 2, 2012

Corbett eying private lottery manager
Source: Associated Press, March 31, 2012

Gov. Tom Corbett is taking steps toward hiring a private company to run the Pennsylvania state lottery, the latest move by the Republican to shift state services to the private sector….Last year, a private group that includes GTECH and Scientific Games took over management of Illinois’ lottery with promises to boost sales and revenue. The group gets a $15-million-a-year management fee and a percentage of profits it produces above a certain level….

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