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.