Last updated: October 28. 2013 11:47PM - 835 Views
ANGELA COULOUMBIS The Philadelphia Inquirer

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HARRISBURG — Pennsylvania State Treasurer Rob McCord on Monday called on Gov. Corbett to scrap his bid to privatize management of the Pennsylvania Lottery, arguing the administration has already spent almost $3.5 million on legal fees and consultants on a “misguided” effort.

That number is bound to rise if the administration continues its quest to bring in British firm Camelot Global Services to run the lottery, which helps fund programs for senior citizens, said McCord, a Democrat seeking to challenge Corbett in next year’s election.

Corbett has said he wants to hire a company to manage the lottery because of concerns that the system, while profitable now, would not be able to keep up with growth of the state’s senior population.

The administration must decide by day’s end Tuesday if it will extend Camelot’s bid.

A spokesman for the governor called on McCord to offer “a real solution” to keep the lottery profitable. “Unfortunately Mr. McCord hasn’t brought a solution to the table — only criticism,” spokesman Jay Pagni said. “He is putting politics before programs for older Pennsylvanians.”

According to McCord, of the $3.4 million the administration has paid over the last year to seal the deal with Camelot, the lion’s share — $2.36 million — has gone to legal consultant DLA Piper. Another privatization consultant, Greenhill and Co. LLC, previously received $1 million, and the law firm of Blank Rome has received more than $116,000 to defend the governor’s plan against litigation.

“I call on Gov. Corbett to put this failed and costly experiment to an end,” McCord said in a statement. “… Do not divert more money from our seniors.”

Corbett’s efforts to privatize have been thwarted by state Attorney General Kathleen Kane, who ruled in February that the lottery deal violated the state constitution. Kane said lawyers on her staff determined that the contract with Camelot, which runs Britain’s national lottery, usurped the legislature’s authority to regulate and manage the state lottery.

Under the proposed contract, Camelot would make annual payments, and if lottery profits fell short of those amounts, the firm would reimburse the state for the shortfall — up to 5 percent of profits — from cash required to be held as collateral. Camelot would guarantee a $34 billion profit over the 20-year contract.

The state-run system offers no similar guarantees, the administration argues. The Department of Revenue, which oversees the lottery, estimates it would generate roughly $30 billion over 20 years.

In the fiscal year that ended June 30, the Pennsylvania Lottery recorded nearly $3.7 billion in sales and sent more than $1 billion to state programs that help the elderly.

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