Pennsylvania extends Camelot lottery bid despite mounting criticism

30th October 2013 1:53 pm GMT

Pennsylvania Governor Tom Corbett has agreed to extend the deadline for Camelot’s proposed bid to take over as the private manager of the Pennsylvania Lottery, despite the State Treasurer Rob McCord this week urging the governor to end what he called the “flawed and wasteful privatization effort.”

After consultation with several legislative leaders, the Corbett Administration confirmed Tuesday that the commonwealth and Camelot Global Services had mutually agreed to extend the UK lottery operator’s bid for the lottery private management agreement until the end of the calendar year. The deal was originally set to expire at the close of yesterday.

“Older Pennsylvanians deserve every effort of my administration and the legislature to make sure they have access to the programs upon which they rely,” said Corbett.”It is our responsibility to ensure that the lottery is positioned to grow in order to meet growing needs.

“Today that need is outpacing our ability to pay for it. With the Legislature's support, we can work together to set a path and plan for the future of services for older Pennsylvanians.”

The governor had given his support for Camelot’s bid back in January of this year, following a procurement process that began nine months prior to that.

Camelot's priced bid proposes $34bn and twenty years' worth of lottery profit growth should a private management agreement for the Pennsylvania Lottery be executed. It is expected that that annual growth will generate between $3bn and $4.5bn in new funding for senior programs over the contract term.

Earlier this week however, State Treasurer Rob McCord called on the governor to end the “flawed and wasteful privatization effort” after revealing that $3.4m from the state Lottery Fund had so far been paid to consultants and law firms during the process.

“If that $3.4m were a stack of $1 bills, it would be taller than the Comcast Building – the tallest building in Pennsylvania,” said McCord. “That towering stack of money is Lottery Fund money – money that could and should have been used to help our seniors.

“Instead, Gov. Corbett’s team poured that $3.4m into the governor’s misguided ideological pursuit of a privatization plan that is both unwise and unauthorized by law.”

Treasurer McCord was the first statewide official to express concerns about the proposed arrangement, informing the administration in December 2012 that he might not be able to disburse commonwealth funds to Camelot if the company, as proposed in a draft plan, introduced types of gaming not authorized by the Lottery law, or types that could conflict with the 2004 state law that legalized slot machine gambling exclusively at licensed casinos.

Pennsylvania Attorney General Kathleen Kane later claimed that the contract violated the state constitution. Kane said at the time that the state’s executive branch exceeded its authority by “unlawfully infringing on the General Assembly’s power to make basic policy choices regarding the management and operation of the Lottery”.

“From the beginning, the governor’s plan has been driven by blind ideology and a myopic desire to privatize a government function at all costs,” McCord said. “Sometimes, privatization may make sense, but this is not one of those cases.

“I consider the administration’s lottery consulting contracts to be a gross waste of money. But they are not illegal,” McCord concluded. “Unfortunately, the Fiscal Code does not allow me to block foolish payments, only unlawful ones.”

The state’s Auditor General Eugene DePasquale has however begun to review and scrutinize the Corbett Administration’s diversion of the lottery funds.

“Funds from the Pennsylvania Lottery are supposed to help older Pennsylvanians with prescriptions, transportation, home-delivered meals and property tax and rent rebates, not to fatten the coffers of law firms and private consultants over a lottery privatization contract that may never see the light of day,” said DePasquale in a statement yesterday.

“For the sake of the senior citizens who benefit from Lottery-funded programs, and Pennsylvanians in general, we must review these payments to make sure that we can account for every single penny. I urge Governor Corbett to terminate any further discussions with private vendors that are siphoning funds from senior programs.”

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