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Corbett on Defensive in Lottery Deal

Capitol Media Service

UPDATE 12:50pm 1/17/13: The Corbett administration has signed the 20-year deal with Camelot Global Services to run the PA Lottery.

Original story:

It is widely expected that Pennsylvania Governor Tom Corbett will announce Thursday that he has inked a final deal with a private British firm to run the state’s lottery for the next 20 years.  The administration came out strong Wednesday against those who have been bashing to tentative deal.

Some state lawmakers are balking at what they say is a dearth of information from the administration about the lottery deal with Camelot Global Services. The loudest cries have come from Democrats but even Republicans voiced pointed questions and commentary at this week’s state Senate hearing on the privatization plan:

Sen. Pat Vance (R-Cumberland County) said she’s suspicious of any agreement where only one company makes a bid. Two bidders other than Camelot dropped out of the bidding process, and their names were disclosed publicly for the first time today: Tatts Group, an Australian company, and GTECH, based in Rhode Island.

Vance asked short, specific questions about where Camelot would base its operations, how it would grow the Lottery’s customer base, and whether such a business plan would have other societal costs in Pennsylvania.

“I think some of these questions come about because of the lack of transparency,” she said.

The governor objects to the “lack of transparency” criticism leveled at his administration. At an unrelated event in Lancaster Wednesday, he pointed to an announcement and a state House hearing held in April on the administration’s plan to look into privatizing the lottery.

“It was out there,” said Corbett. “I can’t help it if people were paying attention or not.”

The administration has also maintained they were unable to disclose more details sooner because of state contract bidding restrictions.

Corbett said Wednesday that evaluating and choosing private bids on the lottery is a role for the executive branch – not something that, as some lawmakers have suggested, should require their input.

“So, what you’re saying is the Legislature has the ability to say, we like this bid or don’t? That’s not the way it works,” said Corbett. He likened it to a bid on purchases of vehicles, or goods and services. “That’s what this is,” said Corbett, referring to the Pennsylvania Lottery operations. “This is a service.”

Camelot Global Services has said it wants to expand games to include keno – a fast-moving game that, according to plans divulged here in Pennsylvania, would be played at a machine with a video monitor.

Keno players pick a set of numbers – up to 20, according to one gaming expert – and wait for a drawing. Crudely speaking, the more the player’s numbers match the figures pulled in the drawing, the higher the jackpot.

Sal Scheri, president of WhiteSand Gaming, has recently headed the Valley Forge Casino in Montgomery County. He said the drawings fly by quickly – sometimes as many as three a minute.

“You’ll have some people that will just try a few games and get up and leave and you’ll have some people that could sit there for, you know, an hour or more,” said Scheri.

Some lawmakers, most of them Democrats, have said keno resembles slots more than typical lottery games, where someone buys a scratch-off ticket or waits for a Powerball drawing. They have argued adding keno to the Pennsylvania Lottery is an expansion of gaming that requires legislative approval. The Corbett administration disagrees.

Camelot would bring the game to 1,000 retailers, like bars and restaurants, within the first year of its pending contract with the state. That number would swell to 3,000 retailers over the first five years of the contract.

The firm’s executives say keno is critical to meeting its promised profit levels.

Scheri said keno and slots offer two very different experiences. “The interaction is a little bit different. The time on the devices is probably – if you want to compare – is probably a little bit lower on the keno games,” he said.

Casinos have not been making their voices heard on the potential expansion of the Pennsylvania Lottery to include games like keno. Scheri said it’s because casinos don’t buy the idea that they’re going to lose slots customers to keno.

“We just don’t see the impact on casinos being that great,” said Scheri. “The [keno] games are not offered in a casino environment, they’re offered in very different areas, you know, perhaps a bar or a pub or a tavern. There’s not hundreds of thousands of them, there’s usually just a few.”

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