Corbett expected to hire private manager for Pa. Lottery

Posted: March 31, 2012

HARRISBURG - First, he retired Gus the Groundhog, the furry pitchman for the Pennsylvania Lottery. Now, Gov. Corbett wants to hire a private company to run the sixth largest lottery in the nation.

Corbett is expected to announce plans Monday to hire a private manager for the state's $3.2 billion lottery, according to sources familiar with the idea.

In what is being described as a preliminary step, Corbett is seeking a request for qualifications from companies interested in managing the lottery, which brought in nearly $1 billion in revenue last year, after prize winnings and expenses. Under federal law, the state may not sell the lottery outright, but it may contract out day-to-day management of the agency, which currently employs 230 people.

It was unclear whether legislative approval would be needed to contract out lottery operations.

Corbett has been pushing privatization of government services in an effort to increase revenue and streamline operations. Earlier this year, he formed a privatization commission to offer recommendations on which services might be better administered privately and how best to do that.

Some questioned the idea of the state's spending money to hire a company to manage an agency that is bringing in record revenues and supports popular programs for older people such as transportation, senior centers, and long-term care services.

Since the lottery started in 1972, it has provided $21.5 billion in funding for senior services, the only state lottery in the country whose proceeds are dedicated exclusively to the needs of older residents.

Under former Gov. Ed Rendell, the lottery expanded marketing efforts and availability in retail outlets, driving ticket sales from $2 billion to more than $3 billion.

"My first question to the administration is: If it ain't broke, why fix it?" said David Fillman, executive director of AFSCME Council 13, which represents about 150 clerical workers and lottery agents.

In 2010, Illinois became the first state to contract with a private manager for its lottery in an effort to increase sales.

Fillman said a similar proposal in New York state in 2008 by then-Gov. Eliot Spitzer was dropped after backlash from senior citizens, who benefit from lottery proceeds there.

One source, close to the lottery operations, called the timing of Corbett's announcement ironic considering that lottery-ticket sales will likely hit an all-time weekly record after the wildly popular MegaMillions drawing.

Steve Miskin, a spokesman for House Majority leader Mike Turzai (R., Allegheny), said privatizing management of the lottery is something worth taking a close look at.

"The governor has been leading efforts in privatization, and it's no secret lottery is one of things being looked at," Miskin said. "We definitely support privatizing what doesn't need to be done by government."


Contact Amy Worden at 717-783-2584 or aworden@phillynews.com

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