Firm's bid to run Pennsylvania lottery mulled

Union to deliver counterproposal by Jan. 8 deadline

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HARRISBURG -- A decision on whether to hire a private firm to manage the state lottery remained unresolved Friday, with officials still seeking a longer period to review the sole bid and offering a renewed defense for bringing on an outside company.

The bid from Britain-based Camelot Global Services PA LLC to operate the Pennsylvania Lottery will expire Monday night without further action. But Gov. Tom Corbett's administration and Camelot representatives say they're discussing an extension, potentially until mid-January.

Revenue Secretary Dan Meuser said in an interview Friday that a bid extension could be for two or three weeks, which would push a decision until after the Jan. 14 Senate committee hearing scheduled on the matter.

It also would place the decision after the Jan. 8 deadline for the lottery's unionized workers to submit an alternative plan to Camelot's 20-year proposal.

Mr. Meuser said his agency intends to be "very cooperative" with lawmakers who plan to raise concerns at the upcoming hearing.

"We have an excellent lottery and excellent people running it," he said. "This allows us to go essentially from very good to great by bringing in a global expert on lottery growth. But we still own the team -- the commonwealth still retains all rights and authority."

The Corbett administration has faced criticism since announcing in April that it was exploring the idea of hiring a private manager. Officials said an outside firm could promise stable annual profits, which pay for programs for seniors.

Democrats and other opponents have questioned how the closely guarded procurement process was run, as well as whether an outside firm is needed to take over an agency that celebrated record-high profits last summer.

During a news conference Friday, Auditor General Jack Wagner pointed to the failed wine sales kiosks created under then-Gov. Ed Rendell as an example of why sole-source contracts are problematic.

"There's too much information that's not available," Mr. Wagner told reporters.

Mr. Meuser said the negative reaction has surprised him and Mr. Corbett, describing some claims as "potshots" by opponents and noting that they held more than 100 meetings with legislators.

"Why is that a partisan issue?" he asked of the aim to boost revenues. "We're only trying to do the right thing for today and tomorrow."

Since the Camelot bid was announced in November, state officials have released documents outlining a potential contract with the firm and its revenue projections.

Over the first five years, Camelot's proposal guarantees growth of 9.1 percent, or about $400 million more than what the state is projecting on its own, Mr. Meuser said. Over the next decade, it could mean about $800 million in additional funding.

The new funds would come from increasing marketing efforts among new demographics; offering new games like keno in non-traditional retailers, such as diners or pubs; and expanding the total number of retailers by 10 percent over the next five years, potentially to include big box stores, he said.

"In any business, there's a reason to bring in new people and consider new approaches toward responsible growth," Mr. Meuser said.

He also defended the protections included in that contract, which he said would allow the state access to a $150 million credit line in case revenues fall short and would give state officials options for ending the agreement.

Brian Duke, who heads the Department of Aging, said the need for new approaches can be seen in the state's growing older population. About 2.7 million Pennsylvanians are over age 60, a figure expected to rise to 3.6 million by 2025 or 2030.

Waiting lists for older-adult services also have begun to grow more quickly, from a prior rate of 1,300 people per year to now adding nearly that many residents within a single quarter, Mr. Duke said.

"This is not just a bump in the road. This is going to be a trend that will stay with us," he said, noting that 75 percent of the aging department's budget comes from lottery proceeds.

As Pennsylvania continues to mull the Camelot bid, New Jersey officials announced Friday that they received a single bid in their search for an outside manager.

Camelot had been mentioned as a potential bidder there but did not submit a proposal. The bid under consideration is from joint venture by a Canadian pension fund and two gambling companies that also run the Illinois lottery, GTECH Corp. and Scientific Games International Inc.

electionspa - state

Bureau chief Laura Olson: lolson@post-gazette.com or 1-717-787-4254. Jim O'Toole contributed.


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