By Kevin Zwick Staff Reporter Capitolwire
HARRISBURG (Dec. 30) – Gov. Tom Corbett’s administration announced Monday it will drop plans to outsource management of the Pennsylvania Lottery to a British firm, ending more than a year of negotiations.
The announcement comes a day before the administration and Camelot Global Services LLC would have had to decide whether to extend the firm’s $34 billion bid it placed last November.
An email from Camelot says the firm and the administration decided not to pursue an extension “due to changes in Pennsylvania’s political and competitive environment for lottery since agreement was first reached over a year ago.”
In February, the attorney general’s office nixed the contract, saying it violated the state constitution and lottery law, while usurping legislative authority. Attorney General Kathleen Kane’s decision continued numerous bid extensions between Camelot and the Corbett administration. The firm, which runs the United Kingdom’s National Lottery, was the lone bidder after two other companies dropped out of the procurement process that began in April 2012.
The deal was also criticized by legislative Democrats and polled poorly with the public. The union representing a majority of the Lottery’s workforce also sued the administration in an attempt to halt the contract.
The proposal was also panned by State Treasurer Rob McCord, a Democrat aiming to challenge Corbett’s re-election next fall. McCord said the administration has spent nearly $4 million on consultants for the privatization deal.
In a statement, Alex Kovach, managing director of Camelot Global, said of Monday’s announcement: “We remain on good terms with the Commonwealth of Pennsylvania and are open to future possibilities. Camelot will continue to build our international relationships, having recently been announced as the preferred bidder for the National Lottery of Ireland, as well as several consulting contracts in North America.”
The Corbett administration began pursuing the private management agreement bid in early 2012 as a way to generate more revenue for the Lottery as the large Baby Boomer generation begins to retire. The Lottery subsidizes programs for seniors including low-cost prescription drugs, free or reduced-fare transit and long-term care, and also provides funding for the local Area Agencies on Aging.
“As we move forward, we will take what we’ve learned to make our successful lottery even better – expanding the player and retailer base, improving player loyalty, and implementing strategies that will grow our lottery, responsibly and efficiently,” Corbett said in a statement. “…Our continued goal is to ensure a growing, predictable revenue stream for senior programs to meet the growing demand, and we will continue to work with all stakeholders and interested parties to explore new ways to harness market resources to enhance our Lottery’s continued success.”
The firm pledged to increase annual profits at the Pennsylvania Lottery by as much as $4.5 billion during the life of a 20-year contract by using Keno-style gaming and online gambling.
