Deal to let British firm run Pa. lottery still alive

HARRISBURG - The Corbett administration's deal with a British firm to run the Pennsylvania Lottery will remain alive - at least for another month.

Administration officials said Tuesday that Camelot Global Services had agreed to extend through Aug. 30 its bid to manage the lottery. Corbett's office has sought a series of extensions since state Attorney General Kathleen Kane ruled in February that the lottery deal violated the state constitution.

Among other things, Kane said, lawyers on her staff had determined that the contract with Camelot, which runs Britain's national lottery, usurped the authority of the legislature to regulate and manage the Pennsylvania Lottery. Kane's office reviews all state contracts.

The latest extension will give Corbett more time to decide how to revise the contract to alleviate Kane's concerns.

The stakes are high. In the fiscal year that ended June 30, the Pennsylvania Lottery recorded nearly $3.7 billion in sales and sent more than $1 billion in profits to state programs that help the elderly.

The administration has said it began exploring the possibility of hiring a company to manage the lottery because of concerns that the state-run system, while profitable, would not be able to keep up with what it expects to be a rapid growth of the state's senior population.

According to figures from the Department of Aging, Pennsylvania has nearly 2.3 million people over age 60, including more than 300,000 who are 85 or older. By 2030, nearly a quarter of the state's population will be older than 60, and the 85-and-older population is expected to increase by 80,000.

Under the proposed contract, Camelot would make annual guaranteed payments, and if lottery profits fell short of those amounts, the firm would reimburse the state for the shortfall - up to 5 percent of profits - from cash required to be held as collateral.

Camelot would guarantee a profit of $34 billion over the life of the 20-year contract.

The state-run system offers no similar guarantees, the administration argues. The Department of Revenue, which oversees the lottery, estimates it would generate roughly $30 billion over the same 20 years.