Pa. Gov. extends lottery privatization contract

Oct 30, 2013, 11:30 am (2 comments)

Pennsylvania Lottery

HARRISBURG, Pa. — Gov. Tom Corbett's administration will continue its examination into the privatization of the management of the Pennsylvania Lottery for two more months.

The administration announced Tuesday that United Kingdom-based Camelot Global Services has agreed for an 11th time to extend its bid's expiration date, which was set to expire today. It now is good through Dec. 31.

Camelot, the lone company to submit a bid, committed to generating $34.6 billion in profits to fund lottery-funded programs for senior citizens over the next 20 years. It backed up that promise with a $200 million fund to cover any shortfall if it fails to meet annual profit commitments provided the contract's terms and conditions don't change.

The governor's staff has been trying to rework the proposed contract with Camelot over the past eight months to address concerns raised by Attorney General Kathleen Kane when she rejected the initial contract in February.

In a news release, Corbett indicated the decision was made in consultation with several legislative leaders. He further went on to say that the extension will allow the commonwealth to pursue legislative efforts to address the need to grow reliable revenues for programs for older Pennsylvanians.

In a nod to trying to smooth relations with lawmakers in this exploration, Corbett indicated his intention to work with the Legislature in setting a path for the lottery's future. Over the past year, Democratic and some Republican lawmakers have criticized the governor for not involving them enough in this decision.

"There are significant reasons to explore ways to grow the lottery and stabilize the Lottery Fund," said Senate Majority Leader Dominic Pileggi, R-Delaware County, in the news release. "It is our duty to make sure our mothers, fathers, neighbors and friends have the services they need and that the commonwealth has the means to pay for them."

The administration's prolonged exploration into figuring out a way to hand over the lottery's management to a private firm has come with a cost.

Since April, the cost of consultants' fees have risen by about $1.5 million, to nearly $3.5 million. But with the extension, they could go as high as $4.3 million, according to information provided by the state Department of Revenue, which oversees the lottery.

Those funds will come out of the Lottery Fund unless the contract is awarded to Camelot and then it would cover those costs.

A Camelot spokesperson also has indicated that if the commonwealth executes the management contract, it will establish a headquarters in Pennsylvania, pay state taxes and keep lottery jobs in the state. However, they would not be on the state payroll

The privatization of the lottery's management would result in the loss of some state jobs — and all the benefits that go with them — for about 170 lottery employees.

This week, state Treasurer Rob McCord called on Corbett to put an end to this exploration and let the in-house lottery management continue to operate as is without an outside manager. He complained that the $3.4 million in consultant fees that Treasury paid to date out of the Lottery Fund is money that could have gone to buy prescriptions, meals and transportation service for senior citizens.

Earlier Tuesday, state Auditor General Eugene DePasquale echoed those concerns and vowed to closely scrutinize every payment made to consultants to account for every penny "for the sake of the senior citizens who benefit from Lottery-funded programs, and Pennsylvanians in general."

DePasquale issued a separate statement later saying that he disagrees with Corbett's decision to extend the lottery privatization exploration but respects the governor's right to make that decision.

But House Democratic leaders took a harder stance in disapproving of the governor's decision and said they were not among the legislative leaders who the governor consulted.

"It's beyond time for the Corbett administration to abandon its plans to hand over management of our highly successful lottery to a foreign company," said House Democratic Leader Frank Dermody of Allegheny County. "This spectacle has gone on far too long and it is costing our seniors who benefit from lottery-funded programs millions of dollars."



RedStang's avatarRedStang

Italian vs Irish. This is going no where. Camelot would have better luck in Thailand.

winsumloosesum's avatarwinsumloosesum

Camelot probably is laughing at these Keystone cops.  They have nothing to lose since they were the only bidder.  This could drag on until the Gov. finishes his term.

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