PA’s Pending Privatization

Linked below is an analysis of PA’s latest Pending Privatization: to sell our profitable Lottery. I find it fair and reasonable. Look it over and decide for yourselves, counter-arguments are encouraged:

The sole (1) bid was released publicly on November 20, 2012, and is valid for less than 6 weeks. So we’d better hurry up, right? That sole bidder would like that. But would We The People?

That bidder is Camelot Global Services, which is owned by the Ontario teachers’ pension fund. Pretty convenient, given that Greenhill & Co., PA’s private consultant managing that bidding process, also worked on the sale of Camelot to that foreign entity. Camelot’s projection of returns is around the rate of inflation (3%), but lower than current (3.5%).

Have we learned nothing from The Political Class advising the recipients of its campaign donations, on our dime? The only US state with any history of a privatized lottery – Illinois – is currently embroiled in court with that consultant. IL may be spending projected lottery capital doing so.

Given recent experience with hand-picked private consultants, I’d look deep into the fine print, for any vague and broad CYA statements absolving anyone of liability should these returns not occur. Recent testimony to the PA Senate regarding our most famous snafu saw well-paid expert after expert swear under oath that they have no liability for the Harrisburg fiasco. Sen Folmer said we’ve paid $50M in consulting fees on less than $350M total debt. So far, all official recovery proposals involve only taxpayer financing.

Speaking of hand-picked consultants, it has been exhaustively documented that we paid Deloitte a lot to design and run an employee time accounting software for the Commonwealth of PA (CWoPA). I can tell you firsthand that it is the most inflexible, non-user-friendly and inefficient package I’ve ever used. I have used many of the most common OTC packages, which have far superior functionality. Privatizing this function, as opposed to using CWoPA’s substantial full-time IT staff to do it, locked us into a complex system requiring that consultant to run it. This makes our bargaining power going forward weaker. Most ominously, it puts much of the management of CWoPA databases firmly in private hands.

There is an additional ominous side to the lottery, though…regardless of who runs it. A private lottery is worse than a typical municipal interest swap: where the consultant gets paid either way, and no one is liable if anything goes wrong. Here, there are “incentives” that pay the consultant even more if the lottery growth improves. Lottery growth can only occur, of course, through more effective predatory advertising targeting its desperate and uneducated client base:

I still wish we did not have a predatory lottery. If we have to have one, what is wrong with We The People running it on behalf of ourselves? Nothing can be so wrong that it needs to be “corrected” in 16 days. Last year’s similar rush to correct the ills of undocumented voter fraud landed us in court. We lost, solely and specifically because ample time to address concerns was not demonstrated. Lets take our time this time.


About steventodd

Both parties are broken by big money...what to do? I'm a dad, husband, son, taxpayer, voter, civil engineer, reporter, blogger, rabble-rouser and honest guy.
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4 Responses to PA’s Pending Privatization

  1. geminijlw says:

    Now we know the problem, always have really, corruption, what will we do about it? I am working on that, but need people to stand up with me and others. People out there must be angry enough to stand up, and thanks for your posts and this blog.


    • steventodd says:

      Gemini: From your previous posts, you are an #Occupy Harrisburg participant. I sat out that valiant act of heroism. I was with you in spirit, as were many. I stand prepared to next time, provided the next #Occupy movement more clearly spells out its goals.

      I appreciate your exhaustive efforts on this most important issue for the survival of our democratic republic. I also note your willingness to call out the tireless hypocrites on both of the only two teams allowed at the table when either starts with the tired old: “yeah, if we get The Bad Guys out and vote in The Good Guys, it will all get better.” We’ve given that a few decades and centuries. It hasn’t worked.

      Let me know when/how you want to proceed. Provided your efforts and messages remain non-partisan, they are welcome here.

      Peace to you my friend.

      ~ Steve


  2. steventodd says:

    I will be at the event below, at the Capitol Bldg, East Wing Rotunda at the bottom of the escalators, 11:15am, Thursday, December 20. I have offered to read some or all of my latest on this issue, if the organizers want.

    Join Gene Stilp and Occupy Harrisburg in the PA State Capital Building. For an demonstration opposing the sale of the PA Lottery to private entities.

    The PA Lottery is a public asset that helps senior citizens. It should remain that way. We must stop this trend of putting public works in the control of private business. This is fascism.

    It was asked that Occupy join in the protest.

    Anyone who can to be there, please be there.


  3. steventodd says:

    Tweeted 12/20/12 @stevenwtodd:
    Big @GovCorbett donor appointed to privatization advisory panel, wife to @PHMC. @CommonCause calls foul. MT @inkyamy


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