Pa. unveils $34B, 20-year bid to privatize lottery

Associated Press Modified: November 20, 2012 at 7:30 pm •  Published: November 20, 2012

"There is no good reason to dismantle the lottery," said Dave Fillman, the executive director of AFSCME Council 13, which represents the employees. "The administration has sold out our seniors and our members without one public hearing, without any legislative oversight and without anyone knowing how they crafted the terms and cut this deal. ... The bottom line here is that every single dollar that this firm is paid comes at the expense of our seniors."

Brassell said the management company's incentive pay would be capped at 5 percent of profits. Compensation would include its invoiced costs of managing the lottery, including payments to contractors, personnel expenses and administrative expenses, while less than 1 percent of profits would be allowed to cover the management company's indirect, non-invoiced expenses.

In addition to online gambling and allowing keno terminals in bars or restaurants, other options to expand gambling could include online ticket sales or an aggressive new search to add more lottery retailers.

Currently, the 40-year-old Pennsylvania Lottery is run by the Department of Revenue, and profits benefit programs for the elderly, including transit, rent and property tax rebates, prescription drug assistance, senior centers and long-term care services.

State law requires the lottery to produce 27 percent of its sales in profit for the state, but that floor rises to 30 percent in 2015. The Corbett administration will ask the Legislature to keep the required profit level at 27 percent through the life of the contract, Brassell said.

Camelot's profit projections, however, show that maintaining a 27 percent profit floor would result in a higher dollar value for the state, a quirk Brassell attributed to the ability to sell more of the popular, higher-payout scratch tickets.