Monday, February 8, 2016

Pro: Time to privatize running of state's lottery

By Dan Meuser and Brian Duke

Pro: Time to privatize running of state's lottery

Gov. Corbett
Gov. Corbett

By Dan Meuser and Brian Duke

When it comes to creating a more secure financial future, there’s just no substitute for planning ahead. That’s exactly what Pennsylvania aims to do through Gov. Corbett’s initiative to ensure Pennsylvania Lottery-funded programs for older adults can keep up with the huge wave of baby boomers nearing eligibility age.

To be better prepared to serve those citizens, we’re exploring establishing a private management agreement for the lottery.  The Pennsylvania Lottery performs well, but we must find ways to maximize its performance. We need to tap private-sector innovation to make all parts of state government work more efficiently and effectively.

The Pennsylvania Lottery is the nation’s only lottery that exclusively benefits older residents, and that will not change. It supports vital programs that include low-cost prescriptions, property-tax relief, free and reduced-fare transit, long-term living services, and a myriad of social, educational, and recreational programs and services provided through 52 Area Agencies on Aging and hundreds of senior community centers across the state.

Should Pa. pursue plans to privatize running the lottery?
No, why risk losing money that benefits seniors?
  232 (33.3%)
Yes, will be able to reduce costs
  69 (9.9%)
No, suspect it's just about throwing business to campaign donors
  258 (37.1%)
Yes, if Gov. Corbett can show it will save money and boost lottery returns
  137 (19.7%)
Total votes = 696

Over the last five years, Lottery net profits have grown an average of just 0.3 percent per year. In addition, the lottery’s net revenue is projected to grow about 1 percent, on average, per year through fiscal year 2014-15, which is not likely to keep pace with cost increases and demand for current programs.

A private management agreement offers the potential to secure a more predictable and reliable funding source, which would ensure the continued strength and availability of Pennsylvania’s services for older adults.

The decision to establish a private management agreement will not be made quickly or on a whim. First, we’re asking interested parties to demonstrate their operational integrity, financial stability, and lottery management experience. Then, we’ll engage in a phase of due diligence where prospective bidders would gain an understanding of the lottery and the state would assess the capabilities of prospective bidders.

Importantly, the Pennsylvania Lottery would not be sold. The commonwealth and Department of Revenue would maintain ultimate control and authority over the Pennsylvania Lottery to ensure responsible growth and advance the lottery’s unchanging mission to fund programs benefitting older Pennsylvanians.   

Dan Meuser is Pennsylvania’s secretary of revenue and Brian Duke is secretary of aging.

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