Governor backs British firm to run Pennsylvania lottery
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HARRISBURG -- A British firm that operates the United Kingdom lottery likely will soon be overseeing the commonwealth's scratch tickets and jackpot games, with Gov. Tom Corbett's administration alerting lottery employees of the upcoming move Friday afternoon.
The bid award decision, which administration officials said is not binding, comes three days after the labor group representing most of the lottery's unionized workforce handed in its alternative plan for boosting lottery revenues.
In an end-of-the-workday email to lottery workers, Revenue Secretary Dan Meuser said the contract with Camelot Global Services PA LLC is expected to be given final reviews and signed next week.
"We're confident that by combining one of the nation's best lotteries with one of the best private-sector lottery industry experts in the world, we'll end up with a win-win proposition to grow and protect Lottery profits for decades to come," Mr. Meuser wrote.
In a brief statement Friday evening, the Corbett administration said issuing the award notice allows state officials "to disclose contractual and procurement details" about the management contract during a Senate hearing scheduled for Monday morning.
"The administration will gather information at the hearing and the near future will determine what is in the best interest for Pennsylvania seniors," the statement read.
A proposal from Camelot to operate the state lottery was set to expire at midnight tonight, after two extensions.
Camelot submitted the sole bid for a 20- to 30-year contract to run the state's lottery, pledging that the operation will provide about $34 billion in profits over that time period.
The company has promised to boost revenues by adding games like keno, expanding the number of retailers and broadening the demographics of those purchasing lottery tickets.
"We know the state has placed enormous trust in giving us responsibility for its lottery and we intend to work tirelessly to earn that trust," Camelot officials said in a statement. "We are confident in our projections on growing responsibly the Pennsylvania Lottery over the next 20 years and guaranteeing the economic future for seniors programs."
Lottery proceeds fund programs for older Pennsylvanians, such as property tax rebates and discounts on prescription drugs. Mr. Corbett and other administration officials point to the state's growing senior population as a key reason to boost revenues.
Hiring the firm would make Pennsylvania the third state in the country to use a private firm to manage its lottery system. Illinois and Indiana have done so, and New Jersey is considering a similar move.
It remains unclear what a contract with Camelot will mean for the 170 unionized state lottery workers in the coming months. Documents on the proposal have indicated that the Department of Revenue, which runs the lottery, would retain about 70 of the approximately 230 employees.
AFSCME executive director David Fillman said employees were told they may have an opportunity to interview with Camelot as the company staffs up. The firm said in its Friday statement that it intends "to retain as many current lottery employees as possible and increase the number of employees in Pennsylvania overall."
The labor group, which sued in an attempt to prevent a management contract from being executed and filed a grievance, has argued that the firm's proposal would provide less funding for seniors programs and too little security against missing its profit margins.
"Obviously we're disappointed," Mr. Fillman said shortly after employees were notified. "We still have a lot of unanswered questions and a lot of uncertainty. This is not a good deal for the employees but also for the taxpayers and for the state's senior programs."
Monday's Senate Finance Committee hearing on the proposal remains scheduled, with committee chairman Mike Brubaker saying in a statement that "significance of this issue warrants a public forum."
Democrats, who have expressed skepticism about such a deal since the administration announced it was considering hiring an outside firm, fumed about the timing of the late Friday email to employees as well as the decision to select Camelot before a public hearing on the proposal could be held.
"This shows a disturbing lack of transparency by the Corbett administration and hinders a meaningful dialogue on Monday regarding this multibillion-dollar deal," Sen. Matt Smith, D-Mt. Lebanon, said.
The Legislature does not have a role in signing off on the contract. But House Minority Leader Frank Dermody, D-Oakmont, sent a letter to Attorney General Linda Kelly, who is required to approve all state contracts, and asked her to leave the document for her successor to review after she is sworn in Tuesday.
"Beyond the sheer length of the proposed Private Management Agreement (PMA), and its extensive exhibits, there are serious financial and legal questions about the Camelot proposal that deserve a thorough vetting," Mr. Dermody wrote. "A contract that would bind the Commonwealth's lottery operations for 20 to 30 years requires more than just a cursory review."
First Published January 12, 2013 12:00 am