Kane rejects lottery privatization deal

Photo by Mary Wilson / witf

Pennsylvania’s Attorney General has deemed the Corbett administration’s deal to privatize the lottery a losing ticket.

Kathleen Kane, a Democrat, rejected on Thursday the contract to hand over operations of the Pennsylvania Lottery to a British firm, saying the deal failed a legality review because it violates both the state constitution and state law on gambling.

Gov. Corbett, in a written statement released later Thursday afternoon, said he was "deeply disappointed."

"I don't agree with the attorney general's analysis and decision, and we will review our legal options," said Corbett in the statement. 

Kane is already warding off criticism that her office’s rejection of the contract means less money available for seniors programs, throwing the blame for such disappointment at the feet of the Corbett administration.

“It is disingenuous to put the cart before the horse by promising money to people in need based upon a contract before making sure that that contract was legal and then blaming the messenger when it is deemed illegal,” Kane said.

In recent days, Gov. Corbett and the secretary of the Department of Aging have warned of “financial implications” if the contract is not finalized. They point to a loss of $50 million for seniors programs that would have been available for the next fiscal year had the contract gone through. 

“Be wary of information by politicians that attempts to blame the lawyers who reviewed the contract for the loss of any monies to seniors,” said Kane. “We did not write the contract, nor did we negotiate the deal.”

In a written statement responding to Kane's decision, Sen. Vincent Hughes, the ranking Democrat on the Senate Appropriations Committee, said he’s confident lawmakers can find $50 million for such programs in the budget process.

Kane cited three reasons for rejecting the contract:

1. The Corbett administration overstepped its bounds by signing the deal without the Legislature’s input.
2. State law doesn’t allow the kind of expansion of gambling planned for in the contract and that expansion would require oversight from the state’s Gaming Control Board.
3. The contract would have allowed for compensation of “indirect expenses” incurred by Camelot, which violates the Pennsylvania Constitution.

Kane took no questions after her announcement. Her spokeswoman requested reporters to submit written questions by e-mail due to the “technical legalities” of the contract review.

The Corbett administration signed the contract with British firm Camelot Global Services in mid-January. The 20- to 30-year contract with Camelot would have come with a promise of $34 billion dollars in profits over the life of the deal – an annual increase over current year lottery profits of three to four percent.

Camelot based the guarantee on plans to expand lottery games to include keno within the first year of the contract and online gaming after five years.

State Democrats and the union representing lottery employees opposed the deal, and had sued the commonwealth to stop it. The state treasurer had warned he might not authorize payments to Camelot to operate the lottery, based on his belief that the planned expansion of lottery games would have required legislative approval.

This post has been updated to include a response from the Corbett administration.