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Report: Privatizing Lottery a Losing Ticket for PA, Seniors

GRAPHIC: As the clock ticks on a bid to privatize the Pennsylvania Lottery, a new report says the deal is a bad one for the state and its seniors.
GRAPHIC: As the clock ticks on a bid to privatize the Pennsylvania Lottery, a new report says the deal is a bad one for the state and its seniors.
December 24, 2012

HARRISBURG, Pa. - As the clock ticks on a bid to privatize the Pennsylvania Lottery, a new report says the deal is a bad one for the state and its seniors. Stephen Herzenberg, executive director of the Keystone Research Center and study author, says the upside to the lottery being taken over by Camelot Global Services exists only from the company's perspective.

"This deal looks lousy for the Commonwealth, which would lose some of the critical funding that goes to senior programs like low-cost prescription drugs, senior centers and transportation for Pennsylvania seniors."

The administration of Governor Tom Corbett has said it's trying to determine whether a deal like the one on the table from Camelot would offer profits more in line with the growing demand for elder services.

Herzenberg says one problem is the state has just one bid on the table and it expires at the end of the year. He says that alone should be a red flag that a decision of this magnitude deserves far greater consideration than it's gotten so far. In addition, he notes that there have been no public or legislative hearings on the contract.

Another angle Herzenberg says is far too risky, revolves around the private consulting firm Governor Corbett hired to manage the bidding process, since it has ties to the the lone bidder.

"There's a glaring conflict of interest with the Commonwealth's adviser on privatization. Greenhill and Company stands to make, according to some press reports, $30 million if this deal goes through. Does that have an impact on the advice they're giving the Commonwealth? Of course it does."

Herzenberg points out that the scale of lottery profits being talked about by Camelot is weak.

"This private contractor is promising to deliver guaranteed revenues to the Commonwealth that at best match, over twenty years, the rate of inflation. Well, the Commonwealth has done better than that itself in the last decade."

Herzenberg says the question marks surrounding multiple facets of the deal point to the need for a more transparent and comprehensive review.

See the full report at bit.ly/VepyI1.

Tom Joseph, Public News Service - PA