Corbett expected to hire private manager for Pa. Lottery

HARRISBURG - First, he retired Gus the Groundhog, the furry pitchman for the Pennsylvania Lottery. Now, Gov. Corbett wants to hire a private company to run the sixth-largest lottery in the nation.

Corbett is expected to announce plans Monday to hire a private manager for the state's $3.2 billion lottery, according to sources familiar with the idea.

In what is being described as a preliminary step, Corbett is seeking a request for qualifications from companies interested in managing the lottery, which brought in nearly $1 billion in revenue last year, after prize winnings and expenses. Under federal law, the state cannot sell its lottery outright, but it can contract out day-to-day management of the agency, which employs 230 people.

It was unclear whether legislative approval would be needed to contract out lottery operations.

Corbett has been pushing privatization of government services as a way to increase revenue and streamline operations. Earlier this year, he formed a privatization commission to offer recommendations on which services might be better administered privately and how best to do that.

Some questioned the idea of the state's spending money to hire a company to manage an agency that is bringing in record revenue and supporting popular programs for older people, such as transportation, senior centers, and long-term-care services.

Since the lottery started in 1972, it has provided $21.5 billion in funding for senior services, the only state lottery in the country whose proceeds are dedicated exclusively to the needs of older residents.

Under Gov. Ed Rendell, the lottery expanded marketing and availability in retail outlets, driving ticket sales from $2 billion to more than $3 billion.

"My first question to the administration is: If it ain't broke, why fix it?" said David Fillman, executive director of AFSCME Council 13, which represents about 150 clerical workers and lottery agents.

In 2010, Illinois became the first state to contract with a private manager for its lottery in an effort to increase sales.

Fillman said a similar proposal in New York in 2008 by then-Gov. Eliot Spitzer was dropped after backlash from senior citizens, who benefit from lottery proceeds there.

One source close to the lottery operations called the timing of Corbett's announcement ironic considering lottery-ticket sales were expected to hit an all-time weekly record after the wildly popular Mega Millions drawing.

Steve Miskin, a spokesman for House Majority leader Mike Turzai (R., Allegheny), said privatizing management of the lottery was worth taking a close look at.

"The governor has been leading efforts in privatization, and it's no secret lottery is one of the things being looked at," Miskin said. "We definitely support privatizing what doesn't need to be done by government."