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Lottery privatization pursuit turns up one bidder after two drop out

By   /   November 21, 2012  /   No Comments

THE PENNSYLVANIA LOTTERY was created in 1971 to help generate funds for programs to benefit elderly residents. The lottery has generated more than $22.6 billion for state-run programs since the first game went on sale, according to the Department of Revenue.

By Melissa Daniels | PA Independent

HARRISBURG — Pennsylvania’s pursuit of privatizing management of the state lottery yielded only one interested party.

The state announced Tuesday it received a bid from Camelot Global Services, which runs the National Lottery in the United Kingdom.

Camelot estimates it would bring annual profit commitment of $12.1 billion in the first 10 years. Projections for a 20-year period, assuming a 27 percent mandated rate of return, would yield more than $34 billion in profits, according to the official bid tabulation.

Department of Revenue press secretary Elizabeth Brassell said Wednesday the state had three qualified bidders in May. But two dropped out since then. One was interested in pursuing other commercial opportunities. The other left the process because it felt the contract was “was too one-sided” for the commonwealth, Brassell said.

Now, the state will go back and compare Camelot’s projections to its own to see if the agreement would be worth the revenue. It will also pursue an investigation into Camelot’s criminal history, business practices and contract integrity.

The state will also sit at the table with unionized lottery employees, represented by the American Federation of State, County and Municipal Employees, Brassell said, which is required by the process.

According to a Department of Revenue fact sheet, the commonwealth expects that it could carry out an management agreement as early as January 2013.

The Pennsylvania Lottery earned record profits last year topping $1 billion when sales hit a record-breaking $3.48 billion. Annual profit projections from Camelot show profits as high as $1.9 billion within the next 20 years.

Commonwealth officials have maintained the state needs to find a way to boost lottery returns in the face of a growing senior population.

Lottery revenue funds programs like free transit, rent and property tax rebates, senior centers and prescription drug assistance programs.

Last week, the state’s Independent Fiscal Office reported that from 2010 through 2020, the state’s population of residents between the ages of 70 and 79 would grow by 34.6 percent. The population aged 95 and older would grow by 139 percent.

Brassell said the state has no target figures for how much it needs to sustain lottery-funded programs in the face of the growing senior population, but is exploring a private manager in order to end up with higher overall net revenue.

Contact Melissa Daniels at [email protected]


Melissa formerly served as staff reporter for Watchdog.org.