Pa. officials insist precautions built into Lottery proposal
December 31, 2012By Mary Wilson
The Corbett administration is facing a growing outcry for more information about a pending deal to lease the operations of the Pennsylvania Lottery.
Those officials insist precautions are built into the drafted agreement to protect the commonwealth's interests -- and the Lottery proceeds that pay for seniors' programs.
As soon as the commonwealth began to go over contract terms to hand over the Lottery to a private company, state Revenue Secretary Dan Meuser says there was money at stake.
"First off, $50 million of a bid fee. Additionally, at the time a agreement would be executed, they would be required, they meaning the winning bidder, to put $150 million in reserve," Meuser said.
The $50 million bid fee will go to pay for the costs of reviewing the bid, and legal and financial advisers to the Corbett administration.
The $150 million is cash collateral -- the commonwealth will be able to use it to make up for shortfalls in the Lottery's performance if the private company under-delivers.
What if profits don't keep pace for years?
Meuser says that cash collateral fund would either be replenished, or the state would consider reversing the contract -- which he says could be done without suing the private company involved.
If Camelot Global Services, the sole bidder for privatizing operations of the Pennsylvania Lottery, gets the contract, residents will see more promotions of the games.
More advertising and different displays at stores that sell Lottery tickets would be a part of the privatization deal currently under review, Meuser said.
"Certainly marketing, branding, and capturing the attention of potential lottery players is part of the plan to improve Lottery revenues," he said.
Meuser adds the private company bidding on the Pennsylvania Lottery has a track record of boosting profits, not by getting "the same people to play more," but getting "more people to play a little."
He said Pennsylvania will ensure certain controls stay in place, such as prohibiting the sale of Lottery tickets to those under 18.