If Alabama gets a lottery, private management may at least be an option.
But the Republican leader of the Senate said Wednesday he did not want to commit to any particular proposal, being wary of some of the negative experiences of other states with private managers.
"Having no experience in the lottery field, we're just going to have to look at what other states have done and what's worked best for them," he said.
Marsh is sponsoring legislation that would establish a lottery and gambling in the state, in the hopes that it would help Alabama address a looming shortfall in the state's General Fund budget. The bill moved out of a Senate committee Thursday and is headed for a vote in the full Senate.
Marsh's bill would put oversight of a lottery in the hands of a group called the Alabama Lottery and Gaming Commission. The governor, lieutenant governor, attorney general, speaker of the House and Senate president pro tempore would each make one appointment to the five-member commission.
The commission would be able to regulate the lottery; however, specific details of its powers would be determined by the Legislature. If the constitutional amendment gets out of the Legislature and is approved by voters in September, the Legislature would convene in a special session to determine enabling legislation.
Day-to-day operations of the lottery could be contracted out, said Marsh, but that would be a question when the lottery itself was set up.
"What I would expect if we're able to get something passed is the gaming commission would make that decision, or that it's done in the enabling legislation," he said. "Obviously I want what's best for the state, and what produces the most money in tax revenue."
Since the first state lotteries were created about 50 years ago, states have generally run their own lotteries. Starting in 2010, states began experimenting with turning to private companies to run their lotteries, in the hopes of maximizing revenues to the state. Private companies have traditionally operated lotteries in foreign countries, including the United Kingdom.
However, the relationships have frequently been acrimonious. Illinois severed its relationship with Northstar Lottery Group, a consortium of private companies, last December after Northstar fell short of revenue projections for three straight years. Indiana has had more success with its operator, but has also dealt with slow growth.
The reasons for the failures vary; in the Illinois case, an arbitrator blamed certain state procedures for preventing the state from hitting its targets. Thomas Garrett, a professor of economics at the University of Mississippi, said in an email that allowing private managers leeway to innovate in the games would be helpful.
"True privatization would allow the lottery to operate in any way it wanted to (just like any other business) and all sales from the lottery would be taxed by the state (similar to casino gaming) — the state would have no say in the types of games offered, the vendors used, contract terms, etc.," he wrote.
Victor Matheson, a professor of economics at the College of the Holy Cross in Worcester, Mass., said the efficiencies that privatization sometimes creates generally don't exist in a lottery.
"Running a lottery is just not that complex," he said. "There's not much innovation that can occur. It's not like you get a whole lot of benefits from adding entrepreneurs into the mix. All you get is the middle man."
Marsh said with other states having gone through the process, the state might be spared the trial and error other states have experienced.
"We want to make sure that whatever path we go gives the most success to the state," he said. "I would think we wouldn't go down a path where there was a bad experience."