HARRISBURG, Pa. — Pennsylvania received one bid in response to its search for a private manager to run the state's lottery system, officials announced Tuesday.
Gov. Tom Corbett's administration announced on Tuesday that a priced bid and 20 years' worth of annual profit commitments has come in from United Kingdom-based Camelot Global Services PA LLC.
Camelot, the firm that currently operates the United Kingdom's lottery, was the only company to submit a bid outlining how much revenue it pledged to raise over a 20-year management contract.
Camelot's commitment promises to grow the profits from just more than $1 billion to $2 billion by 2033. That would include adding keno and other online lottery game options.
An administration official told legislative staffers and union officials in a conference call that two other firms that had expressed interest but have since dropped out of the running for this lucrative contract. Among the reasons that were cited included discomfort with some of the protections that the state was seeking from the successful bidder.
The commonwealth began exploring a private management agreement for the lottery eight months ago as a way to maximize its profit and ensure secure, predictable funding for programs benefitting the state's growing senior population.
Camelot's bid is valid until Dec. 31 and is supported by $50 million in bid security the commonwealth would retain if Camelot is awarded the bid but fails to execute the contract. PMA but fails to execute the contract. The firm would put up $150 million in cash collateral and a $50 million line of credit to guarantee its profit commitments, an administration official told the staffers and union officials.
The state could also tap into that pot of money if the manager goes insolvent or breaks teh contract terms, among other reasons.
Revenue Secretary Dan Meuser called receipt of the priced bid an important milestone in the process.
"While there are several additional steps before we'll be prepared to make a final decision, this is a proposal that warrants a complete and detailed review, and it is encouraging to see the potential private manager propose 20 years of significant profit growth," Meuser said.
The administration already has begun discussions with union officials about possible layoffs that would result. The agreement with the private lottery manager would require they retain 70 state employees, but Revenue spokeswoman Elizabeth Brassell said the bidder has expressed interest in the possibility of hiring some of the lottery's other 160 employees.
The state's lottery is one of the nation's top performers, which is among the reasons why Democratic lawmakers and union officials have questioned going the privatization route.
Last year, the lottery posted a record $3.2 billion in ticket sales, producing a profit of nearly $961 million to put into programs for senior citizens. It administrative costs, around 2 percent of ticket sales, are among the lowest of lotteries operating in the nation.
David Fillman, executive director of American Federation of State, County and Municipal Employees Council 13, said, "There is no good reason to dismantle the lottery. The administration has sold out our seniors and our members without one public hearing; without any legislative oversight and without anyone knowing how they crafted the terms and cut this deal.
"Keep in mind that our lottery is not broken. We've set a record for total sales and net profit the last two years. The bottom line here is that every single dollar that this firm is paid comes at the expense of our seniors."
If the bid is accepted, Pennsylvania would join Illinois and Indiana in hiring an outside firm to manage its lottery system. Several other states, including New Jersey, reportedly are considering taking a similar step.