As the state mulls privatization of the Pennsylvania Lottery, York County legislators tentatively said it's worth considering whether a private company could better oversee the $3.48 billion gambling operation.
Gov. Tom Corbett is pushing a plan to hire a company to manage the lottery for 20 years with the chance to extend that for 10 years in exchange for guaranteed annual profits.
The state last week released the terms to be met under such a scenario, possibly expanding to Internet games and Keno. Neither move would require legislative action from the House or Senate.
But state Democratic leaders are demanding proposals and proof such a move would benefit the state, as Corbett said the plans hinge on whether the move would be profitable.
Local Republicans said they support the idea of free enterprise taking over, but they also want to see more details before declaring support.
At stake, they said, are the billions of dollars the lottery raises for senior initiatives such as the Property Tax/Rent Rebate Program, transit programs and prescription drug assistance programs.
"I would want to be clear that those programs would not be in jeopardy as a result of privatizing the lottery," said state Rep. Keith Gillespie, R-Springettsbury Township. "But in this economic situation, it behooves us to look at anything that comes down and make sure the good and bad criteria rolled into it are explored."
More information: State Rep. Ron Miller, R-Jacobus, wants to learn more about costs, savings and the gambling changes expected before he commits to a
position, he said.
"I had a major concern with (legalizing) slots, but it doesn't seem to have had an impact," he said. "We need to make sure we protect the integrity of (the lottery). There are a lot of safeguards built into the PA Lottery system to make sure nobody's cheating the system. If it goes to private enterprise, it's no longer under the oversight of the state."
Majority Whip Rep. Stan Saylor, R-Windsor Township, also said he wants to know more.
A private company might be able to operate more efficiently, reducing the number of employees or taking other cost-cutting measures, he said.
"Sometimes businesses do a better job of running things than the government," he said. "But we'd need to look at the company's record and what they propose to do first. I'm always supportive of privatizing things that can be privatized to free enterprise, but not every program fits into that."
'Deep concerns': The York County delegation's lone Democrat, Rep. Eugene DePasquale, D-York City, is opposed to privatization and said he has "deep concerns."
He'll be sworn is as state auditor general next year and said evaluation of proposals such as lottery privatization is exactly what he'll be doing in his new position.
"It's one of the best-run lotteries in the states," he said. "I'm willing to explore new ideas, but I'm deeply skeptical."
He said only 1 percent of lottery proceeds goes to overhead, so it's unlikely it's a system that could be better run by the private sector.
DePasquale said he's also concerned about efforts to increase gaming "just to feed the private company running it."
Keno next: The lottery reported $3.48 billion in sales in the 2011-12 fiscal year. After prizes and expenses, net revenue was $1.06 billion.
The key terms of the state's plan require the company chosen to run the lottery to pay $150 million in cash up front, to act as a guarantee for future revenue. The contract would guarantee the state a certain amount of revenue; if the company did not meet that in any year, the state would make up the difference from that original $150 million.
Elizabeth Brassell, spokeswoman for the Department of Revenue, which runs the lottery, said the state will add Keno even if it doesn't hire a private company.
Keno is a game based on the drawing of numbers that must correspond with a player's numbers. All of the games would be based in the Pennsylvania Lottery's computer system, but the game would be played in bars, taverns and social clubs, she said.
Drawings would likely be held throughout the day instead of just once daily.
Adding Keno doesn't require legislative authorization from the House or Senate, nor does the hiring of a private manager for the lottery, Brassell said.
She declined to say how many and which businesses have submitted plans. After the state approves the business plans, it will ask those companies for bids, she said.
-- The Associated Press contributed to this report. Reach Christina Kauff man at ckauffman@york dispatch.com.