AFSCME Privatization Update

Source: By Benjamin N. Gedanm, Providence Journal, Sunday, February 10, 2008

For five decades, state governments have maintained a stranglehold on lotteries, reaping huge gambling profits from the monopoly.

That tradition could be coming to an end, as cash-strapped states consider selling their games to private operators. The sales would generate a windfall to pay for roadway and school construction or to erase unfunded pension liabilities, while drying up annual lottery revenues that have been propping up state budgets.

For global lottery operator GTECH Holdings Corp., however, the potential changes would likely boost yearly profits.

....... GTECH executives have been meeting with state legislators across the country to discuss privatization and to project the potential growth in lottery revenue. Their message: squeamish state governments are surrendering millions in gambling winnings.

Posted by Info Center at 2:43 PM in Lottery | Permalink
Tags: Rhode Island

Source: By Dave Gram, Associated Press, January 21, 2008

Betting on the state lottery for some quick cash? Get in line: State governments across the country are thinking the same thing. Courted by Wall Street investment houses, Vermont is one of more than a dozen states where proposals have been floated to lease state lotteries to private investors.

...... But some fear that private companies would be more focused on profits than people, introducing addictive games that prey on compulsive gamblers.

..... Lehman Bros., Goldman Sachs, UBS Investment Bank and others -- lured by the prospect of millions of dollars in fees for bringing states and private lottery operators together -- are expected to keep knocking on state capital doors.

Posted by Info Center at 11:23 AM in Lottery | Permalink

Source: By Joseph Spector, Ithaca Journal (NY), January 11, 2007

Gov. Eliot Spitzer's announcement this week to explore a lease of the state lottery puts New York among a number of states looking to roll the dice on getting an infusion of cash to pay for services.

But from constitutionality questions to concerns about the social consequences of putting the gambling operations in private hands, no state has yet to adopt the potentially lucrative deals.

Lawmakers and gaming experts Thursday questioned whether New York would face the same issues as it explores either selling future lottery revenue in a lump sum or leasing it to a private entity for possibly up to 40 years.

Posted by Info Center at 11:00 AM in Asset Sale/Lease | Lottery | Permalink
Tags: New York

Source: Associated Press (IN), November 21, 2007

Gov. Mitch Daniels said today he won't make a renewed pitch in the upcoming legislative session for his proposal to privatize the Hoosier Lottery, saying lawmakers will be too busy considering property tax reforms.

During the last session, Daniels proposed leasing the lottery to a private operator and said one company was willing to pay $1 billion plus $200 million in annual payments for the 30-year lease.

Posted by Info Center at 11:20 AM in Lottery | Permalink
Tags: Indiana

Source: By Andrea Estes, Boston Globe (MA), October 22, 2007

As Governor Deval Patrick's casino bill is being debated on Beacon Hill, a group of Republican lawmakers is pushing another way for the state to reap a large gambling windfall: privatizing the Massachusetts lottery.

........ Though several states have debated lottery privatization, none has approved it. California and Texas would probably be the first to close a deal, according to investment bankers and others who have pitched proposals around the country. The state would solicit proposals from bidders, who would have to pay $1 million to have their proposal considered, the bill says.

Posted by Info Center at 1:31 PM in Asset Sale/Lease | Lottery | Permalink

Source: NELSON D. SCHWARTZ and RON NIXON, New York Times, Sunday, October 14, 2007

.... Like shoppers at convenience stores who can't resist placing bets when lotto jackpots get big enough, government officials in at least a dozen states are considering lottery privatizations -- what would collectively amount to the biggest privatization of a government enterprise in American history.

Wall Street, positioned to play an important role in orchestrating these deals, is looking at some very big prizes itself. If privatization plans now being considered in four large states -- California, Illinois, Texas and Florida -- were to go through, Wall Street could conservatively reap a minimum of $250 million in fees alone.

Posted by Info Center at 10:58 AM in Asset Sale/Lease | Lottery | Permalink

Source: By JEROME R. STOCKFISCH The Tampa Tribune (FL), Sep 27, 2007

...... Now, the state lottery and a handful of toll roads and bridges are drawing the interest of private investors who are putting a price tag on those assets and want a piece of the action.

Facing a $1.1 billion hole in the state budget because of an economic slowdown, the state is listening.

This summer, major Wall Street firms approached Florida, as they have other states, with the prospect of leasing the state lottery.

Posted by Info Center at 3:07 PM in Asset Sale/Lease | Lottery | Transportation | Permalink

Source: John Kennedy, Orlando Sentinel (FL), September 5, 2007

Looking to plug a $1.1 billion hole in the state budget, Gov. Charlie Crist said Tuesday that he is considering lots of options -- including turning the state lottery over to private vendors.

The Republican governor also said the state might draw more money into the treasury by allowing private companies to build, service and maintain some Florida roads in exchange for a share of toll revenue.

Posted by Info Center at 11:07 AM in Lottery | Transportation | Permalink

Source: By Robert Elder, Austin American Statesmen (TX), Thursday, August 9, 2007, 02:28 PM

A handy “deal log” is issued at almost every meeting of the Teacher Retirement System board of trustees. It lists the system’s current investments in private equity and real estate and which firms the trustees are considering for future investments.

The most recent deal log includes an intriguing reference under “further due diligence:” A potential $300 million investment in a massive fund from a firm called Colony. Its strategy, according to the deal log, is “privatization of state lottery.”

...... Gov. Rick Perry in January floated the idea of selling the Texas lottery to private interests to boost the budget surplus, but the plan went nowhere in the legislative session.

Posted by Info Center at 11:34 AM in Lottery | Permalink

Source: Ed Brock and Brian Sedlak, American City & County, Vol. 122 no. 4, April 1, 2007

By selling public assets, local and state governments are raising funds and paying down debts without increasing taxes. The strategy was first applied to toll roads, and now parking garages and state lotteries are up for sale or lease to private investors. Asset concessions are used to bridge budget gaps while increasing or maintaining revenue from unprofitable assets.

Posted by Info Center at 3:48 PM in Asset Sale/Lease | Lottery | Overview/General | Transportation | Permalink

Source: Jay Young, PA Times, Vol. 30 no. 3, March 2007
(subscription required)

After years of reduced federal support from Congress and the Bush Administration, state and local governments have recently been aggressively pursuing new sources of revenue to meet the service requirements of its citizens. Increasing taxes on income, real property, or even sales taxes are widely viewed as anti-business, anti-citizen and the equivalent to political suicide….

… Recently governments have begun to privatize assets to generate increased cash from either one time payments, a royalty like stream, or a combination of the two…

Posted by Info Center at 3:36 PM in Asset Sale/Lease | Lottery | Permalink

Source: California Budget Project, Budget Brief (.pdf), June 2007

In conjunction with his May Revision to the 2007-08 Proposed Budget, the Governor proposes to privatize the California lottery. The Governor suggests that the lottery could be leased on a long-term basis to a private contractor for a one-time payment of up to $37 billion.

1 Documents prepared by investment bankers suggest that the state could receive $13 billion to $18 billion from a long-term lease. In addition to promising that public education would receive, at a minimum, “the same dollar level of funding that it received in the highest year of lottery funding,” the Governor states that proceeds from the lease should be used to pay down the state’s debt.

2 The Governor’s proposal assumes that a private contractor could significantly increase lottery ticket sales. This Budget Brief examines whether the California lottery is, in fact, underperforming; whether privatization is necessary to increase lottery sales; and policy issues raised by the Governor’s proposal.

Posted by Info Center at 10:57 AM in Asset Sale/Lease | Lottery | Permalink

Source: By Dale Kasler, Sacramento Bee (CA), Friday, May 18, 2007

If California tries to lease its state lottery to private investors or unload a state-owned student-loan business, as Gov. Arnold Schwarzenegger proposes, there will likely be no shortage of interested parties. Providing capital to a growing privatization movement, investors are offering billions for state lotteries, toll roads and other government-owned assets nationwide.

Posted by Info Center at 2:16 PM in Asset Sale/Lease | Lottery | Overview/General | Transportation | Permalink

Source: By Evan Halper, Los Angeles Times (CA), 11:54 AM PDT, May 10, 2007

Gov. Arnold Schwarzenegger is poised to call for privatizing the state lottery, a move that would bring California a cash infusion of as much as $37 billion to help solve pressing budget problems but also could sacrifice a major revenue source for decades to come.

Posted by Info Center at 11:34 AM in Lottery | Permalink

Source: By ROBERT T. GARRETT and CHRISTY HOPPE, The Dallas Morning News (TX), 07:24 AM CST on Tuesday, February 6, 2007

Gov. Rick Perry plans to ask lawmakers Tuesday to follow him in the boldest initiative of his administration: selling the Texas Lottery to subsidize health insurance for 500,000 low-income adults and fund research to help cure cancer in 10 years.

Posted by Info Center at 10:50 AM in Lottery | Permalink

Source: WTOP News Radio, Jan 31st, 2007

A controversial new way for local governments to raise money has found its way to our area. The District is weighing a plan to privatize its lottery.

Under the new plan, a private firm would take over the District's lottery for the next 20 years or more, in exchange for a huge lump sum payment up front.

Posted by Info Center at 2:11 PM in Lottery | Permalink

Source: By CHARLES DUHIGG and JENNY ANDERSON, New York Times, January 23, 2007

The state of Illinois yesterday took the first steps in selling its state lottery system, hoping to attract as much as $10 billion from investors who, in return, would own a monopoly that could turn out to be the biggest jackpot yet. The sale, which may occur as early as the spring, would not be the first privatization of public property — both Chicago and Indiana have recently earned billions of dollars by signing long-term leases with private companies to run toll roads. But the proposed lottery sale is almost certain be one of the largest privatizations of a state-run program, and it raises concerns that states, some of them critically short of cash, are selling valuable assets that could otherwise provide consistent streams of revenue.

Posted by Info Center at 1:26 PM in Asset Sale/Lease | Lottery | Permalink

Source: BY DUNSTAN McNICHOL, Star-Ledger (NJ), Thursday, November 02, 2006

State officials are studying whether selling the New Jersey Lottery to a private company can reap big money for cash-strapped state coffers, Treasurer Bradley Abelow said yesterday.

...... The state currently controls the lottery and uses a private firm to operate the lottery machines. Selling the entire lottery could provide the state with a huge windfall, and the buyer could get its annual revenues.

........ No U.S. state has tried such a deal, Abelow said, but Italy and Greece have sold off portions of their lotteries, reaping millions.

Posted by Info Center at 11:54 AM in Lottery | Permalink

Source: ASSOCIATED PRESS (IL), 6/01/2006

State legislators, led by a top legislative leader, are raising questions about Gov. Rod Blagojevich's new education plan that could mean trouble for a keystone of the governor's re-election bid. House Speaker Michael Madigan, D-Chicago, sent a letter to fellow legislators and the governor earlier this week with a dozen questions he has about Blagojevich's proposal to privatize the state lottery and pump $10 billion into education.

Posted by Info Center at 11:41 AM in Lottery | Permalink

Source: By MIKE RAMSEY, COPLEY NEWS SERVICE (IL), Wednesday, May 24, 2006

Gov. Rod Blagojevich on Tuesday unveiled a proposal to sell or lease the state lottery to create a $10 billion windfall for Illinois public schools, raising immediate questions about the details and accusations of a back-room deal from his Republican opponent in the fall gubernatorial election. ….. Meanwhile, the American Federation of State, County and Municipal Employees expressed concern for members who work for the Illinois Lottery department. Filan said the lottery purchaser or leaseholder would be encouraged to hire the agency's 200 employees. ….. The city of Chicago used a similar strategy when it privatized its "Skyway" toll highway, Filan said. But AFSCME executive director Henry Bayer said most Skyway employees, which the union represented, refused to work for the new owner because their wages and benefits were going to be cut.

Posted by Info Center at 10:09 AM in Lottery | Permalink