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Economy & Business

Lottery Privatization Could Put Senior Citizen Programs At Risk

Privatizing the Pennsylvania Lottery might have Governor Tom Corbett believing it will boost profits, but it could put programs that benefit senior citizens at risk.  In a new report, the left-leaning Keystone Research Center details how services for the elderly could suffer if the commonwealth rushes into a deal.

The sole bid to operate the lottery is from Camelot Global Services which put a deadline of December 31, 2012 on its offer  which promises to produce more than $34 billion over 20 years as the state looks into expanding into online gambling and Kino.  The governor has said he doesn't believe he needs legislative approval to enter into a deal, but attorneys for Senate Democratic leaders dispute that contention.

Stephen Herzenberg, an economist and executive director of the Keystone Research Center, said each year the lottery generates approximately $1 billion to help fund programs for senior citizens and the proceeds have been supporting those services since the early 1970s.

“These are really critical programs for seniors that need different medications and can’t afford the copays or the out-of-pocket costs without some additional help. Rent rebates, property tax rebates are also critical to helping senior citizens make ends meet,” Herzenberg said.

The report indicated the lottery, which is currently run by the Department of Revenue, has seen record profits in the past two years. The revenue is divided into three categories, with administrative costs ranking the second lowest in the country. Herzenberg said senior services receive about one-third of the profits.

“There’s administration, which is almost nothing. There’s prize money, because people won’t buy lottery tickets unless some of the money is given out in prizes, but then there’s--the figures vary between 27 percent and 32 percent, I think we’re back at 27 percent--of the lottery revenues go to the programs,” Herzenberg said.

To date, there have been no legislative or public hearings on the contract, but Herzenberg said they should not rush into a deal that could be detrimental to everyone. “When we look at this, this a ‘heads- the contractor wins, tails- the Commonwealth and its seniors’ lose kind of deal. At the very least, we got to slow this down, and take a much more transparent look at this situation,” Herzenberg said.