Hearing to be held Monday on proposal to privatize Pa. lottery

A group opposed to the Corbett administration's proposal to turn the lottery over to a private company has filed a lawsuit in Commonwealth Court to try to stop the move.

            The Pennsylvania Senate will conduct a hearing Monday on a Corbett administration proposal to privatize the state lottery, and two local legislators are party to a lawsuit aimed at scuttling the idea.

Both proponents and opponents of Gov. Tom Corbett’s push to outsource lottery operations say Pennsylvania has one of the best-run lotteries in the country.

So why turn it over to a private company? For that matter, why change it at all?

            Those questions are central to a suit filed Dec. 17 in Commonwealth Court in which state Sen. Christine Tartaglione (D-2^nd dist.) and state Rep. Ed Neilson (D-169^th dist.) are plaintiffs along with other lawmakers and Council 13 of the American Federation of State, County and Municipal employees, which represents most of the lottery’s employees.

            “They’re trying to fix something that’s not broken,” Neilson said during a Jan. 3 interview in his office at Academy and Red Lion roads.

The lottery was established by an act of the Legislature and that legislation stipulates that the numbers game be operated by the state, not a private company, said Alaine Williams, an attorney for AFSCME.

It’s the Legislature’s prerogative to make changes in lottery operations, Neilson said.

Also, Williams said, the revenues that pay for senior citizen prescription plans and free mass transit for seniors would be reduced by handing the lottery over to a profit-making company.

            Protecting prescription plans, free transportation and other programs for senior citizens is the very reason why the Corbett administration is considering outsourcing, said Elizabeth Brassell, spokeswoman for the Pennsylvania Revenue Department.

            “Over the coming years, the state’s senior population would grow,” Brassell said in a Jan. 9 phone interview, “and put increased demand on lottery-funded services.”

            To keep up with demand, the lottery needs to expand, she said.

United Kingdom-based Camelot Global Services PA LLC, which is so far the only bidder to take over the lottery, predicted 20 consecutive years of growth, Brassell said. The only way the company, which operates the British national lottery, gets any incentive payments is if it goes above and beyond “what we could achieve on our own anyway,” she said.

            AFSCME Council, however, said that $1.5 billion more in profits could be realized by keeping the lottery completely in government hands.

            “If public employees have the opportunity to operate the lottery under the same expansion that the administration wants to provide Camelot, we would beat Camelot’s guaranteed profits by a least 10 percent to 30 percent — without giving away hundreds of millions to Camelot at the expense of our seniors,” Dave Fillman, Council 13’s executive director, said in a news release Jan. 8.

            Turning lottery operations over to Camelot also threatens 258 Pennsylvania jobs, Fillman stated, and 174 of those belong to AFSCME members.

            Brassell said nothing is definite yet.

            The fact that Camelot is a British company is a sore point with Neilson.

            “We couldn’t find one local company to bid on this?” he asked.

            Williams said the Pennsylvania Lottery brings in $3.4 billion a year in revenue. Winners are paid from the revenues, as are employees, who are paid about $36 million. The commonwealth also spends about $37 million on advertising the lottery, she said.

             The commonwealth, by law, funnels 27 percent of the lottery’s revenues to senior citizen programs, Williams said, adding that it was 30 percent until legislation reduced it during the recession. She said Camelot’s bid requires state lawmakers to pass legislation that keeps the lottery’s contribution to senior programs at 27 percent. Right now, it’s supposed to return to 30 percent of revenues by 2015, she said. ••

Reporter John Loftus can be reached at 215-354-3110 or jloftus@bsmphilly.com