Texas Lottery: Texas Gov. proposes selling the lottery
Texas Gov. Rick Perry said Thursday that his State of the State address on Tuesday would include a plan to fully privatize the Texas Lottery by selling it to private interests.
Perry said such a sale would raise substantial funds that could be used for health care and research.
Other states, including Illinois and Indiana, are looking into the concept, which allows a state to collect a large lump sum to replace future lottery revenue.
The proposal is likely to be controversial because the state's track record of turning over state services, whether welfare programs or toll roads, to national and international corporations has been criticized by some as either not working or a poor bargain.
Perry mentioned his plan at the end of an interview with the American-Statesman's Washington bureau.
Robert Black, the governor's press secretary, declined to elaborate on Perry's comments or explain how the sale would work.
Two of the states that are considering selling their lotteries - Illinois and Indiana - are inviting bids. Illinois hopes to receive as much as $10 billion in exchange for giving up all revenue and profit from the monopoly for 75 years, according to news reports. Indiana is expecting to raise more than $1 billion up front and annual payments of $200 million, according to The New York Times.
The sale of Illinois lottery, according to news reports, could be the biggest in the country - unless Texas puts its game up for sale.
While the Illinois lottery had profits of about $630 million last year, according to The New York Times, the Texas Lottery contributed $1 billion in profits last year to state finances.
Voters approved the establishment of the lottery in 1992, but profits have fluctuated. After a decade-long slump, lottery sales last year finally topped its 1997 record, primarily because of new games with scratch-off tickets.
Suzii Paynter, a gambling opponent with the Christian Life Commission, said she would have to study Perry's proposal before taking a position. But she said the timing seemed odd.
"With a $14 billion surplus," she said, "it sees like the last thing we need is a huge infusion of cash."
State officials have said all but $2.5 billion of that $14 billion is committed already.
But there are other considerations besides money.
Many public officials argue that the state should not be in the gambling business. Selling the lottery would remove Texas from that role.
Then again, public lotteries arose because of scandals in privately run lotteries.
Also, the state might lose control over where lottery tickets are sold and how aggressively it is marketed. The state restricts marketing it considers objectionable.
Even if the state tried to require the lottery buyer to follow current state guidelines, the buyer later could lobby to relax the rules.
It's unclear how selling the lottery would affect ongoing efforts by the gaming industry to persuade the Legislature to approve casino gambling or slot machines at dog and race tracks.
Lawmakers are concerned whether expanding gambling opportunities would hurt or help lottery sales.
Perry has had an on-again, off-again position toward the expansion of gambling.
In 2004, when Mike Toomey was his chief of staff, Perry supported video lottery terminals (slot machines) at race tracks as a way of helping pay for public education. His conservative base objected, however, and Perry retreated.
Toomey is now one of an army of lobbyists pushing gambling expansion. Toomey favors the video lottery terminals, or VTLs, for his clients, while competing interests are working for casino gambling.
Just prior to the start of this legislative session, Perry said he opposes casino gambling, but he said state lawmakers might support slots at racetracks if that helped the state to rein in similar, illegal games known as eight-liners.
"I share with my friends who are proponents of VLTs that their time may have passed because with a budget surplus, there's less pressure on these members to look for new sources of revenue," Perry said.