To avoid court fight, Corbett will revise lottery contract

Posted: March 17, 2013

HARRISBURG - Rather than take the fight to court, the Corbett administration said Friday it would revise its contract with a British firm to privatize the management of the Pennsylvania Lottery.

Gov. Corbett's deal with London-based Camelot Global Services was rejected last month by Attorney General Kathleen Kane, whose office reviews state contracts for legality. Kane said parts of the deal ran afoul of the state constitution.

Corbett could have appealed - a move that could have tied the matter up in court for months, if not years - but will instead make changes to the contract, which he will then resubmit to Kane's office.

"This is about providing for and protecting seniors," Corbett said. "Our goal is to make sure that our dramatically growing senior population will continue to have access to crucial programs and services in the years to come."

Administration officials did not say what changes they were considering, only that a revised contract would be submitted to Kane in "upcoming months." Camelot's bid has been extended until June 30.

This week, Senate President Pro Tempore Joe Scarnati (R., Jefferson) told the Associated Press that the administration was looking to scale back the scope of gambling allowed under Camelot's contract. Senate Republicans, including Scarnati, had been pressing the administration to make it clear that the lottery could not compete with casinos through online gambling.

Among other things, Kane and lawyers on her staff determined that the contract with Camelot, which runs Britain's national lottery, usurped the authority of the legislature to regulate and manage the lottery. She also said that by allowing the lottery to add electronic games such as keno, the contract would exceed what is authorized under state law.

When Kane, a Democrat, struck down the contract, it was widely viewed as a huge blow to Corbett, a Republican, who had been negotiating the deal for months and who was expected to tout it heavily as he gears up for his reelection campaign next year.

The administration has said it began looking into hiring a company to manage the lottery because it was concerned that the state-run system, while profitable, would not be able to keep pace with the projected growth of the senior population. In the last fiscal year, the Pennsylvania Lottery recorded $3.5 billion in sales and sent more than $1 billion in profit to programs that help the elderly.

Under the proposed contract, Camelot would have made annual guaranteed payments, and if lottery profits fell short of those amounts, the company would have reimbursed the state for the shortfall - up to 5 percent of profits.

Camelot would have guaranteed a profit of $34 billion over the 20-year contract.

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


Contact Angela Couloumbis

at 717-787-5934 or acouloumbis@phillynews.com, or follow on Twitter @AngelasInk.

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