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Pennsylvania Lottery privatization Q&A

Pennsylvania LotteryPennsylvania Lottery: Pennsylvania Lottery privatization Q&A
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Secretaries of aging and revenue discuss Camelot Group bid

HARRISBURG, Pa. — If Pennsylvania Gov. Tom Corbett accepts an English company's bid to handle the day-to-day management of the Pennsylvania Lottery, no two state agencies will be more immediately and profoundly affected than the Departments of Aging and Revenue.

The Aging Department is one of the main beneficiaries of the $3.5 billion Lottery, which funds programs ranging from Meals on Wheels to in-home care services for Pennsylvania's senior citizens. The Revenue Department, which has direct oversight of the lottery, is the conduit for that money — and will retain that oversight, which is required by law.

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.

Q: The Department of Aging receives most of the money from the Lottery. Can you talk about how the demand for services has changed and your expectations of how a private manager might increase cash flow to your agency?

Brian Duke: By 2030 one in four [Pennsylvanians] will be over 60. We serve about 35 percent of that population with direct services. We serve 960,000 people each year with direct deserves to keep them in their homes and community.

We have an obligation to be a source of information and support. We play a key role in prevention: what we do to keep people healthy and well and to help people [with services] ... so they don't need to later access more expensive services. That growth and demand tells us we have to look at our revenue stream.

When you look at PACE [the prescription drug program for the elderly] and [other] services, 75 percent of our budget comes from the lottery and the remainder comes from Tobacco Settlement fund and federal sources. We have to make sure that revenue is enhanced and supported.

Q: What sorts of services does Aging offer to older Pennsylvanians?

Brian Duke: The Department of Aging, through relationships with the 52 Area Agencies on Aging in the 67 counties, offers a great variety of services, including Meals on Wheels and community and protective services. We've seen growth in financial exploitation cases, which has us greatly concerned. PACE enhances health and wellness. Lottery dollars are also used, through [the Revenue Department] for the property tax and rent-rebate program and at the Department of Transportation, which offers shared rides and transit [for seniors].

Q: For people who are unfamiliar, what is "financial exploitation?"

Brian Duke: These are cases where individuals have misappropriated or taken someone's financial resources and used them without that person's consent or in [unwanted] ways. Sometimes it's someone cosigning a checking account or managing financial affairs and spending more money for personal purposes.

Q: The administration has until Jan. 10 to make a decision on Camelot's bid. The original deadline was Dec. 31. Why did the administration seek an extension?

Dan Meuser: The primary factor was our obligations ... to the unions. The unions had ... an opportunity to provide a counterproposal [to Camelot]. That is due on Jan. 8. We felt an extension was essential ... [and a] mutual consent extension was reached.

Q: What happens next?

Dan Meuser: We will continue to be very serious about analyzing this bid.

Q: How do you respond to critics who say the proposal wasn't properly vetted?

Dan Meuser: We held a hearing last April. We put together an illustrated brochure on the timetable and what the potential revenues were. And how the payment plans were going to work. ... There is a hearing scheduled for Jan. 14 before the Senate Finance Committee; we are very much looking forward to that. There'll be various stakeholders involved. It's a significant initiative and that is why ... we've been following a due diligence process.

Q: It's not a secret that the lottery has struggled in the face of the growth of the state's casino industry. Why do you think a private manager can do a better job than the state in preserving its financial health?

Dan Meuser: We have an opportunity to make the PA Lottery the No. 1 lottery in the world. [In the bid we] get $150 million in security, annual profit levels that are higher than our projections. If those minimums aren't obtained (which are higher than our projections) we receive funding back. Provides predictability.

Keep in mind we remain in charge of the lottery. We're hiring a business growth manager to maximize responsible growth and maximize responsible net revenue. The casinos are law. They're important for employment to Pennsylvania.

We don't want to upset any other industries. We want responsible growth. And they're going to help us achieve that in a large scale and faster manner than we perhaps would have done on our own. In the casino counties, not all, maybe half, lottery growth is slightly less. [In] about five or six casino counties ... there is a minimal effect, but minimal is not a problem.

Q: Are you concerned about casino industry opposition if a private manager adds Keno, which has been mentioned?

Dan Meuser: Other states have introduced Keno that have casinos. We've received no information that there has been a negative effect. Keno is a terminal-based game that's under the authority of the secretary of revenue. It's a lottery game ... [that] is certainly within ... our authority. We've not talking about video lottery or slot machines or poker. That's a whole different species. That would require legislation and to the best of my knowledge, the governor does not support that.

Q: So what's the longest you can wait before making a decision on a contract?

Dan Meuser: We have this extension to [Jan. 10], and with all due respect to the bidder, I'm sure they're anticipating Jan. 10. We do have the hearing on Jan. 14, and with all due respect to [the Senate] and the Legislature, there is the distinct possibility that an added extension could take place.

What we also have to be very careful about, should that be the case, and there's a number of ifs in there — if a union proposal comes back, if the decision is made to pursue any further extension — is that there's a bid in place from Camelot.

The bid calls for them to take over management in July, so there is a limited time. I'm sure they want as much time as possible to hit the ground running in the first fiscal year [of the contract].

The Morning Call

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14 comments. Last comment 2 years ago by Ronnie316.
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jimmy4164's avatar - andy warhol.jpg
State of Mind
United States
Member #93949
July 10, 2010
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Posted: January 9, 2013, 1:31 am - IP Logged

Q: The Department of Aging receives most of the money from the Lottery. Can you talk about how the demand for services has changed and your expectations of how a private manager might increase cash flow to your agency?

Note that in response to the 2 part question above, Brian Duke talked about the demand for services but failed to say anything at all about how a private manager might increase cash flow to his agency.

    RedStang's avatar - mustangshow zps61f7119e.jpg
    Dutchess NY
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    January 21, 2012
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    Posted: January 9, 2013, 9:24 am - IP Logged

    Pretty sad when they depend on the lottery to keep them going.

      Avatar
      Texas
      United States
      Member #132460
      September 4, 2012
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      Posted: January 9, 2013, 10:20 am - IP Logged

      No matter how great the motives are for the Privatization of Pennsylvania Lottery...I totally disagree with their decision basically because, their beneficiaries will be much affected of the changes.  This will be the burden...and I just hope that whatever the decision is, "people's welfare" should be their utmost consideration and not personal interest of the authorities.


        United States
        Member #116272
        September 7, 2011
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        Posted: January 9, 2013, 10:24 am - IP Logged

        Pretty sad when they depend on the lottery to keep them going.

        I Agree! Their funding should be taken away completely when they get an entitlement attitude.

          rcbbuckeye's avatar - Lottery-043.jpg
          Texas
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          Member #55889
          October 23, 2007
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          Posted: January 10, 2013, 8:51 am - IP Logged

          Q: The Department of Aging receives most of the money from the Lottery. Can you talk about how the demand for services has changed and your expectations of how a private manager might increase cash flow to your agency?

          Note that in response to the 2 part question above, Brian Duke talked about the demand for services but failed to say anything at all about how a private manager might increase cash flow to his agency.

          Looks like Dan answered the second part farther down the article. Probably because that part of the question deals with revenue which is his area of responsibility.

          Bottom line for this lottery as well as any lottery is to bring in as much money as possible. Lotteries are not charitable organizations. As to whether this would really increase revenue, I have no idea. Apparently they think so or they wouldn't be trying to change.

          CAN'T WIN IF YOU'RE NOT IN

          A DOLLAR AND A DREAM (OR $2)

            jimmy4164's avatar - andy warhol.jpg
            State of Mind
            United States
            Member #93949
            July 10, 2010
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            Posted: January 10, 2013, 5:02 pm - IP Logged

            Looks like Dan answered the second part farther down the article. Probably because that part of the question deals with revenue which is his area of responsibility.

            Bottom line for this lottery as well as any lottery is to bring in as much money as possible. Lotteries are not charitable organizations. As to whether this would really increase revenue, I have no idea. Apparently they think so or they wouldn't be trying to change.

            "Apparently they think so or they wouldn't be trying to change."

            Are you sure about that?  You mean you can't think of any other possible reason why certain individuals might want to turn over a profitable state enterprise to a private, for profit, corporation, with uncertainty that the salaries, profits, and other "management" fees will not exceed the current ones?  "Privatization" is a simple formula, is VERY profitable for a FEW, and usually results in the loss of good state jobs which are replaced by low paying ones. 

              rcbbuckeye's avatar - Lottery-043.jpg
              Texas
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              Member #55889
              October 23, 2007
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              Posted: January 10, 2013, 5:17 pm - IP Logged

              "Apparently they think so or they wouldn't be trying to change."

              Are you sure about that?  You mean you can't think of any other possible reason why certain individuals might want to turn over a profitable state enterprise to a private, for profit, corporation, with uncertainty that the salaries, profits, and other "management" fees will not exceed the current ones?  "Privatization" is a simple formula, is VERY profitable for a FEW, and usually results in the loss of good state jobs which are replaced by low paying ones. 

              Nope...not sure at all. As far as really thinking about it, well... I'm just not that interested to spend time thinking THAT much about a state that I don't play in.

              CAN'T WIN IF YOU'RE NOT IN

              A DOLLAR AND A DREAM (OR $2)


                United States
                Member #116272
                September 7, 2011
                20244 Posts
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                Posted: January 10, 2013, 7:05 pm - IP Logged

                Q: The Department of Aging receives most of the money from the Lottery. Can you talk about how the demand for services has changed and your expectations of how a private manager might increase cash flow to your agency?

                Note that in response to the 2 part question above, Brian Duke talked about the demand for services but failed to say anything at all about how a private manager might increase cash flow to his agency.

                Why should they? I dont think anyone should be promised a cash flow increase.


                  United States
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                  Posted: January 10, 2013, 7:07 pm - IP Logged

                  Nope...not sure at all. As far as really thinking about it, well... I'm just not that interested to spend time thinking THAT much about a state that I don't play in.

                  Im not sure why anyone would to try and think as much as jim thinks. Im exhausted thinking about it.


                    United States
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                    September 7, 2011
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                    Posted: January 10, 2013, 7:12 pm - IP Logged

                    "Apparently they think so or they wouldn't be trying to change."

                    Are you sure about that?  You mean you can't think of any other possible reason why certain individuals might want to turn over a profitable state enterprise to a private, for profit, corporation, with uncertainty that the salaries, profits, and other "management" fees will not exceed the current ones?  "Privatization" is a simple formula, is VERY profitable for a FEW, and usually results in the loss of good state jobs which are replaced by low paying ones. 

                    How could any private entity have increased expenses over any government entity??


                      United States
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                      Posted: January 10, 2013, 7:12 pm - IP Logged

                      Private companies don't have the privilege of running sloppy, bloated, exorbitant budget operations like the government.


                        United States
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                        Posted: January 10, 2013, 7:14 pm - IP Logged

                        I think the states and players will benefit from a private operation.

                          rcbbuckeye's avatar - Lottery-043.jpg
                          Texas
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                          Posted: January 10, 2013, 7:27 pm - IP Logged

                          Im not sure why anyone would to try and think as much as jim thinks. Im exhausted thinking about it.

                          Green laugh

                          CAN'T WIN IF YOU'RE NOT IN

                          A DOLLAR AND A DREAM (OR $2)


                            United States
                            Member #116272
                            September 7, 2011
                            20244 Posts
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                            Posted: January 10, 2013, 7:32 pm - IP Logged

                            Green laugh

                            LOL Im doing real good just makin sure my tickets are checked and double checked...