HARRISBURG – Employees of the Pennsylvania Lottery said Tuesday they can beat a profit projection offered by a British firm seeking to manage one of the nation’s largest lotteries under a privatization plan being considered by Gov. Tom Corbett.
The employees’ union made the comments as part of a counterproposal it delivered to Corbett’s administration, which is exploring whether to hire Camelot Global Services on a 20-year contract.
In its proposal, Council 13 of the American Federation of State, County and Municipal Employees said Camelot’s profit projections are largely achieved through the expansion of gambling – not through the company’s expertise – and existing staff can do the job better.
“Our research clearly shows that the lottery could be legally expanded in the same areas and public employees could achieve the same or greater gross sales and net revenues than the sales and profits the private manager claims,” AFSCME said. “Therefore, privatization is wholly unnecessary to achieve the same ends.”
The union said the current lottery employees could return more profits to the state than what Camelot is offering, if given the chance to introduce keno, online games, subscription services and loyalty programs.
The union’s executive director, David Fillman, also said Camelot’s management would be costlier, and that its profits from managing the lottery would take money away from programs for seniors.
Corbett has through Thursday to decide whether to hire Camelot before the company’s bid expires. Administration officials say an extension beyond Thursday is under discussion.
The 41-year-old Pennsylvania Lottery recorded $3.5 billion in sales for the year that ended June 30 and contributed more than $1 billion in profits to benefit programs for the elderly, including transit, rent and property tax rebates, prescription drug assistance, senior centers and long-term care services.
Camelot, which runs the national lottery in the United Kingdom and is a consultant to the California Lottery, is pledging to generate at least $34 billion in profits over a 20-year contract. The company has said it hoped to retain as many current lottery employees as possible.
Only two other states – Illinois and Indiana – have hired private companies to manage their lotteries. The Senate Finance Committee plans a Monday hearing to review the proposed plan to hire Camelot.
The Corbett administration said it would review AFSCME’s proposal Tuesday. Camelot defended its bid as safer for taxpayers.
“Camelot has put forth a bid that would guarantee the economic future for senior programs, while transferring risk from taxpayers to the private sector,” it said in a statement.
Secretary of Revenue Daniel Meuser has said that Camelot’s bid over the contract’s first 10 years is an estimated $500 million to $1 billion more than what he believes could be achieved by the state employees who currently run the lottery.
Meuser says Camelot’s plans include introducing keno to bars and restaurants, expanding the number of lottery retailers, improving the portfolio of games and changing marketing strategies to capture a broader spectrum of lottery players, particularly those in higher income households.
The value of the contract to Camelot will be hundreds of millions of dollars in management fees and potential incentives for exceeding profit guarantees. If Camelot were to fall short of an annual profit guarantee, the state could dip into a Camelot cash reserve to offset it, but only up to 5 percent of the annual profit.
AFSCME also has gone to court to stop the hiring of Camelot, filing a Dec. 17 lawsuit challenging the governor’s authority to award the contract and expand the scope of lottery gambling without legislative approval.