HARRISBURG – June 4, 2012 – State Sen. Jay Costa, the Senate’s Democratic Leader, unveiled legislation that would institute protections for programs serving seniors if Gov. Tom Corbett decides to proceed with privatizing the management of the state lottery.

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“If the governor seeks to privatize the management of the state lottery, there must be parameters and safeguards in place to protect the Lottery Fund,” Costa said. “Programs for seniors are way too important to be put in jeopardy and should not be subjected to the profit imperative.”

[frame align=”right”][/frame]Earlier this year, Corbett announced that he was exploring a private management agreement for the lottery, arguing that it is necessary to generate sufficient revenue to fund future costs. The governor’s office released their assessment that a private management team could have generated an extra $275 million in revenue had it been in place from 2008 through 2011.

“The legislation that I am offering does not interfere with the governor’s planned examination of privatization,” Costa said. “My bill puts teeth into the process and ensures that programs helping seniors are not jeopardized, workers are not threatened and that there is proper oversight.”
Costa said his plan relies heavily on openness, public accountability and scrutiny. The lawmaker said his legislation would require the following as a part of the management contract:

  • Contracts cannot be longer than five years;
  • Control is retained over significant business decisions – the lottery cannot be sold;
  • Information may be demanded for any aspect of lottery operations;
  • Advance notice must be given about operating decisions that impact public interests;
  • Principal offices must be located in Pennsylvania;
  • A percentage of the business must be reserved for minority-owned enterprises.

Costa said that an important aspect of his legislation is the public review of the proposed plan. The contact should be open and done through public bidding and the selection based on stringent bidding protection.

“My plan requires that prior to the selection of a vendor, a public hearing is held and the two finalists unveiled,” Costa said. “I also believe it important for the governor to make the final decision and that the reason he choose one or the other bidder be disclosed.”

The Department of Revenue would be required to report back to the General Assembly on a quarterly basis and the entire operation can be completely investigated in the third and fifth year of the contact.

Costa said the language in the bill is patterned after a similar proposal in Illinois which recently privatized its lottery management.