Let profits guide lottery decision

The key factor in deciding who will manage the Pennsylvania lottery should be who can generate the biggest profits to support programs for the elderly in the coming years.

After weeks of debate and study, Gov. Tom Corbett said that he believes Camelot Global Services can provide the best return and signed an agreement turning management of the lottery over to the British company. Attorney General Kathleen Kane now has 30 days to decide on the legality of the contract.

Corbett’s announcement, not surprisingly, has been criticized by a number of Democratic legislators, the union representing most lottery workers and even some Republican lawmakers. But Pennsylvanians should not be so quick to dismiss the idea.

Indiana and Illinois already have turned management of their lotteries to private companies. New Jersey Gov. Chris Christie is hoping to follow suit.

Pennsylvania will retain ownership of the lottery. Despite what some think, the lottery is not being sold. What’s at stake is who will handle general administrative aspects of the lottery, such as what games are offered and how they will be marketed.

And regardless of who manages the lottery, Pennsylvanians should expect to see more games in more forms, including keno in bars and restaurants, as well as online games in the coming years.

Ohio, Maryland and West Virginia lotteries already offer keno, and it’s only a matter of time before it becomes part of the Pennsylvania lottery. The demographics practically will demand it.

A Legislative Budget and Finance Committee report projects that by 2030, 2.9 million residents – nearly one in four Pennsylvanians – will be age 65 or older. That’s about a million more seniors than the state had in 2010.

Sustaining benefits – such as prescription, transportation aid, property and rent relief and long-term care – for this growing segment of the population will mean the lottery will have to generate a lot more money in the coming years.

Pennsylvania needs a solid plan to do that.

Last year, the lottery generated about $1 billion in profits on $3.5 billion in sales.

Camelot, which is promising to raise $34 billion for the state over 20 years, will put up $150 million cash plus a $50 million line of credit that can be tapped should lottery profits fall short of expectations.

Camelot said part of its plan is to try to increase the number of Pennsylvanians playing lottery games. Camelot’s managing director, Alex Kovach, told lawmakers that 10 percent to 30 percent of Pennsylvanians play the state lottery per week. In the United Kingdom, where Camelot manages the lottery, about half of the adults play the lottery each week.

The incentives Camelot can earn by surpassing profit figures will provide the company with a real incentive to make the Pennsylvania lottery grow and prosper.

Private management for the lottery is a change, but that’s not a reason to reject the idea. The Keystone State needs to grow its lottery games if Pennsylvania is to continue to provide assistance to its older residents.

Camelot is promising $34 billion over 20 years. Is anyone else willing to guarantee more than that level of profit and put their money up to if they fall short?

If not, the decision seems fairly simple.