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Sale of Illinois Lottery could start a trend

May 25, 2006, 9:48 pm

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Illinois LotteryIllinois Lottery: Sale of Illinois Lottery could start a trend

If Illinois privatizes its lottery system, investors and public officials in other states will closely watch the groundbreaking move with an eye toward repeating it, a gaming industry leader predicted Wednesday.

Gov. Rod Blagojevich, a Democrat running for a second term in November, announced Tuesday a proposal to sell off or lease the state's lottery system to private investors in order to bolster school funding. He said the state could get $10 billion out of the deal and use the money to fund major new education programs, more per-pupil spending, and a $1.5 billion construction program.

The lottery makes about $600 million annually after payouts and administrative costs. The idea would be to turn that revenue stream over to private investors, in exchange for the one-time, $10 billion payment. Whether that privatization would be a sale or a long-term lease still hasn't been determined.

Bob Vincent, a spokesman for Illinois' main lottery contractor, Rhode Island-based GTech Corp., said some European countries, including Great Britain and Greece, have privatized parts of their national lotteries. But it has never been done in the United States on the scale Blagojevich is proposing.

In theory, GTech would be among likely candidates for such an investment. But Vincent said the company would need more details about the proposal before it would declare itself interested. "Obviously they would be saying, 'We'd like you to make a large investment,' and you need to know the details of how you're going to operate," Vincent said.

Vincent said that if Illinois' sale is successful, it could start a trend among other state governments that need to liquidate assets for quick cash.

"State lotteries have always been a bit of an orphan: They operate almost like a for-profit corporation," he said. "...A state may look at things and say, 'Why don't we just offer a concession to the private sector?' That notion I can see appealing politically to folks."

Gary Gonder, a spokesman for the Missouri Lottery, said the growth of lottery sales in Missouri left him skeptical that such a proposal would benefit the state. This year, lottery sales in the state are expected to top $900 million, up from $422 million in 1996.

"I'm not sure that selling something today that might be worth twice as much in 10 years is such a good investment," he said. "The state might be leaving a lot on the table."

Republicans say Blagojevich's plan could end up leaving Illinois with less education funding than it has now. Under the plan, $4 billion of the one-time $10 billion payment would be used for a four-year plan to increase education funding. The remaining $6 billion would fund an annuity to replace the lost lottery revenue stream with a $650 million annual payment until fiscal 2025.

After that point, the $10 billion would be gone, and the lottery presumably still would be in private hands. But administration officials said Wednesday that trade-off, almost 20 years from now, would be worth it if the state could rebuild its schools and bolster programs today.

"No government is going to have a plan 20 years out," said Becky Carroll, spokeswoman for Blagojevich's budget office. "Future General Assemblies and governors will continue to deal with the education issue, as we do."

The plan will have to be debated in the Legislature before it could go into effect, and that can't happen until the General Assembly reconvenes in the fall — after the Nov. 7 elections.

St. Louis Post-Dispatch

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7 comments. Last comment 16 years ago by CASH Only.
Page 1 of 1
LOTTOMIKE's avatar - Lottery-063.jpg
United States
Member #7853
October 15, 2004
11352 Posts

hell no!!!!!!!

lets hope this doesn't happen.it will be just like indiana before its all over with.....

    United States
    Member #379
    June 5, 2002
    11296 Posts

    Did you see that an annuity would be funded if Illinois goes private? That would be OK as long as no lottery winners are forced to receive periodic payments.

      justxploring's avatar - villiarna
      Wandering Aimlessly
      United States
      Member #25359
      November 5, 2005
      4461 Posts

      Very simply - I am against privatizing any state lottery.

        luckieStarr's avatar - darven
        United States
        Member #27079
        November 26, 2005
        507 Posts

        That's too funny...I would NEVER play a private lottery...who would ever win?

        Leaving  Keep It In until It Wins!

          bobby jones's avatar - anime15
          United States
          Member #4322
          April 13, 2004
          27 Posts

          i live in Illinois and they don't use the extra money now for schools.the school thing is a smoke screen.the fat cats just want to line there pockets with more dough.Illinois like other states i am sure has millions of dollars in lottery wins that are never claimed,they dont put that money in another jackpot after 12 months.it goes into the politicians pockets.

            bellyache's avatar - 64x64a9wg

            United States
            Member #12618
            March 18, 2005
            2060 Posts

            I believe that if privatizing begins it will be a disaster. I think school funding and the players are the ones who will get the shaft. And the private organizations and politicans will get their pockets lined.

              United States
              Member #379
              June 5, 2002
              11296 Posts

              I believe that if privatizing begins it will be a disaster. I think school funding and the players are the ones who will get the shaft. And the private organizations and politicans will get their pockets lined.

              Connecticut has gone somewhat private with its lottery. The Connecticut Lottery is much better for the player than NY.