Lottery’s costs could be shared

January 19, 2013

The Pennsylvania Lottery is not a hard, tangible piece of infrastructure like the Turnpike, so the thought of its management being placed in private hands doesn’t feel like an abdication of our shared assets.

But the possibility that the $3.5 billion lottery system will soon be managed by the British-based Camelot Global Services nevertheless raises questions for residents and taxpayers in the state.

If the deal comes to fruition, Pennsylvania would be only the third state to privatize its lottery management, behind Illinois and Indiana. The proposed pact that’s been forged by Gov. Tom Corbett and his administration – largely out of sight, it should be said – promises to reap $34 billion for the state over the next 20 years. At the same time, Camelot and its executives will slice off millions of dollars in fees and score cash incentives if the lottery exceeds annual profit expectations.

Despite the Corbett administration’s enthusiasm for the deal, it still has to pass muster with newly elected Democratic Attorney General Kathleen Kane, and legislators are crying foul that they have not been allowed input. Furthermore, a Rhode Island company that was vying for the contract is saying the process was handled unfairly. So it’s not a sure bet, if you’ll pardon the pun, that the lottery will soon be administered from a building 7,000 miles away that’s flying the Union Jack.

But potentially the most worrisome aspect of the whole proposition is Camelot’s designs to vigorously expand the marketing of and participation in the lottery. According to an Associated Press story that appeared in the Observer-Reporter Tuesday, the company envisions placing 3,000 keno machines in bars and restaurants and expanding access to games by bringing them online.

Camelot managing director Alex Kovach told state senators in a Finance Committee hearing that his company, according to the AP, “has marketing techniques and ways in which it designs and presents games and terminals that make them friendlier to the uninitiated or unfamiliar.”

Kovach also pointed out that somewhere between 10 percent to 30 percent of adults play the lottery every week in Pennsylvania, while half of the adult population of Britain plays the lottery weekly.

Now, depending on your perspective, the lottery is a harmless diversion if played in moderation, a necessity to finance programs for the state’s ever-expanding senior population or an evil that leads those who usually can least afford it to fritter away dollars better spent on more productive purposes. Officials around Corbett have vowed that they are going to target higher-earning households to rustle up more lottery players, but our suspicion is that any new players, if they come, will hail from those households where every penny truly counts.

And having a population where 50 percent of adults participate in the lottery or some equivalent every week is not without a host of corresponding problems. The number of compulsive gamblers doubled in the United Kingdom between 2004 and 2010. In 2011, the chairman of Britain’s gambling commission told the BBC that a “small but probably growing” segment of the population had severe problems with gambling. If Camelot is successful in getting half the adults from here to Philadelphia to buy scratch cards, Britain’s problems could be transplanted here.

And the cost of remedying those will be paid for by all of us, whether we play the lottery or not.



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