Sunday News

Another big-business giveaway
By State Rep. Mike Sturla, Special to the Sunday News

As the House Democratic Policy chairman for the past four years, I recognize the crucial role public hearings play in vetting an issue. Hearings are essential in analyzing issues and in educating people on the potential impact of policy changes. That is why I question the Corbett administration's disregard for this useful tool in the governor's "investigation" of selling our state's lottery to a foreign company.

It would have been prudent for Gov. Corbett, before considering, and let alone signing, a bid, to first determine if the state lottery ought to be sold. Judging by the slow trickle of limited information released by his office, it seems the investigation he began last spring was far from exhaustive.

The governor was disrespectful to the General Assembly as well as Pennsylvania residents when his administration announced an agreement had been reached between the commonwealth and British-owned Camelot LLC on Jan. 11, just three days prior to a scheduled public hearing before the Senate Finance Committee. Judging by the standing-room-only attendance at this three-hour hearing, there seems to be massive interest in this issue on the part of the public.

Now even after the administration has provided marginal information on the deal, there is still bipartisan criticism of the plan. Last week we learned that Camelot, after doubling the cost to play the lottery in Great Britain, earmarked the equivalent of $7.8 million in bonuses for top executives. Because no provision in Gov. Corbett's contract prohibits such bonuses, in the future they'll be funded by Pennsylvania taxpayers at the expense of our seniors. This may strike some as ironic, since Gov. Corbett, as attorney general, hung his hat on prosecuting officials for using taxpayer money for bonuses.

The lottery is a profitable asset. Owned and operated by the people of Pennsylvania, the lottery grew a record 8.5 percent last year, driving net profit up by more than $100 million. Every cent of profit goes to programs benefiting our seniors, and we owe it to them to ensure that their funding won't be sacrificed as a result of privatization.

Pennsylvania is only the third state to privatize the lottery. Illinois went to a privately operated system in 2010. That state is now in court fighting the operator, which is attempting to change the terms of its contract after it fell short of its revenue estimates. Indiana had a struggling lottery when it sought privatization, not the $1.06 billion operation the commonwealth boasts.

If this privatization plan fails as it has in Illinois, it could cost Pennsylvania's taxpayers millions of dollars more to buy back our own lottery.

According to Chicagobusiness.com, in Illinois there was an "intense bidding war" to run the lottery. And in neighboring New Jersey (also considering privatization), Gov. Chris Christie has heard from several U.S.-based and international firms. Gov. Corbett gave the Pennsylvania Lottery to the sole bidder.

Perhaps the reason Pennsylvania received a single bid is because our lottery is run so efficiently, limiting what actions a private company can take to make it more profitable. In fact, Camelot Global Services' $34 billion offer promises a growth rate of only about 3-4 percent annually over the next 10 years. We're achieving that already without privatization and ALL the profits go to Pennsylvanians, not to CEO salaries or stockholders.

The only real potential for increased revenue from this "deal" comes from the governor's promise to allow Camelot to expand gaming, something the state can do without giving over control to a foreign corporation.

Regardless of Gov. Corbett's true motivation, to the citizens of Pennsylvania this looks like one more generous handout to big business.

State Rep. Mike Sturla, a Democrat, represents the 96th Legislative District, which includes Lancaster city and portions of Lancaster and Manheim townships.