Pa. lawmakers meet British lottery handler

New manager for state games offers few details on deal

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HARRISBURG -- The British-based firm poised to take over management of the state lottery attempted Monday to sell its business plan to state senators, who still had numerous questions about the near-final deal.

The firm's greeting from lawmakers was less stern than expected after Friday's announcement of the bid award to Camelot Global Services PA LLC. One legislator irked over the administration moving one step closer to a management contract prior to a public hearing even cracked a joke amid his questioning.

"Perhaps we should say, 'Congratulations, you've won the lottery,' " quipped Sen. John Blake, D-Lackawanna, to two Camelot officials.

Alex Kovach, Camelot's managing director, was quick to shift the spotlight away from the company, replying that the real winner would be the older Pennsylvanians who receive property-tax rebates and discounts on prescriptions due to the lottery proceeds.

"This is a deal that is a very, very good deal for seniors here," Mr. Kovach told senators and a packed hearing room.

The hearing was the first opportunity for lawmakers to raise questions on the sole bid received in November. Administration officials say a private firm would take the risk out of budgeting around volatile lottery revenues, which will be outpaced by demand from the state's increasingly elderly population.

Camelot, which operates the United Kingdom lottery, has pledged to bring in more than $34 billion in profits over the course of a 20-year management contract, in part through introducing online ticket sales and keno.

AFSCME Council 13, which represents about 170 of the 230 state lottery workers, offered a counterproposal, which was rejected. The labor group says Camelot's proposal would provide less funding for seniors programs and too little security against missing its profit margins.

Mr. Kovach and Camelot CEO Dianne Thompson said their approach would focus on encouraging more Pennsylvanians to buy a ticket, growing the lottery's base of sales.

They contrasted statistics showing between 10 percent and 30 percent of Pennsylvanians playing the lottery on a given week with those indicating 48 percent of U.K. residents play weekly and 72 percent buy a ticket at least once a year.

"Millions of people play expecting relatively small sums of money," Ms. Thompson said.

The key, Mr. Kovach added, will be to look for lapsed or infrequent players, rather than marketing to those who never try their odds.

While state lawmakers don't have a role in signing off on the final contract, Democrats in particular have questioned whether administration officials can offer new games, like keno, without legislative approval.

Some also have shown skepticism toward the closely held, eight-month process of private talks between the Corbett administration and companies interested in managing the state lottery.

Republican Sen. Pat Vance of Cumberland County said during questioning this morning that "some of these questions have come about because of the lack of transparency."

Mr. Blake asked about the administration's legal ability to move forward on a contract without input or authorization from legislators.

"It's not the governor's lottery. It's not the revenue secretary's lottery. It's the people's lottery, the people's asset," Mr. Blake said, adding on plans to execute a contract without a vote in the General Assembly: "At best it's arrogant. At worst it's political."

Pete Tartline, executive deputy secretary for the governor's budget office, defended Friday's award decision as not intended to be a "slap in the face" but rather a necessary step under the procurement code so that officials can address details of the pending proposal.

"It was a statement of our intent to move forward," Mr. Tartline said. "We now can speak freely about the procurement."

Among the new details disclosed were the names of the two companies that dropped out of the procurement process: Tatts Group, which operates lotteries in Australia, and Rhode Island-based GTECH Corp., which has won previous lottery contracts here.

Administration officials also said Camelot has filed to incorporate its operation within Pennsylvania, and must perform 80 percent of its work in-state.

As for the lottery's current workforce, Camelot officials offered few specifics for the approximately 170 employees who would no longer work at the Department of Revenue when the yearlong management transition is complete.

Mr. Kovach reiterated earlier comments that the firm wants to take "as many as we can."

The contract could be signed by Camelot and administration officials later this week, after which it will go to the attorney general's office for legal review. Attorney General-elect Kathleen Kane, a Democrat who will be sworn in today, will have up to 30 days to point out any issues with the contract.

After Monday's hearing, AFSCME Council 13 executive director David Fillman said the union will continue to pursue its lawsuit attempting to prevent a contract, as well as its filings of a grievance and an unfair labor practice charge.

"Our battle does not end with this hearing," Mr. Fillman told reporters.

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Harrisburg bureau chief Laura Olson: lolson@post-gazette.com or 1-717-787-4254.


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