Gov. John Kasich’s latest government-by-gimmick move: try and privatize the Ohio Lottery – again.
Who would benefit? Wall Street bankers who structure the deal.
Who’d get hurt? Taxpayers whose assets would be sold, the public sector workers whose jobs would be lost, the Cleveland area that would see more family-sustaining jobs with benefits go away…the list goes on.
The administration recently sent out a request for proposal (RFP) that seeks a consultant to evaluate the lottery and “explore an array of alternative enhancement options.’’
If this sounds familiar, it should.
This marks Ohio’s second attempt in four years to privatize the nearly $3 billion agency.
As a candidate for governor, Kasich expressed support for privatizing the Lottery’s management operations – even after a state performance audit concluded that it’s well run. And in 2011, the Ohio Senate slipped privatization language into Kasich’s first state budget plan.
The added language was nearly identical to that sent to Senate leaders by Mike Dawson, who at the time was GTECH’s lobbyist. GTECH, an industry giant that once ran the Ohio Lottery’s back-office operations, is among the major donors to Ohio Republicans.
The plan died amid criticism that it was added with no public scrutiny and concerns that it would violate the state constitution, which says that only a state agency can run the Lottery.
The latest effort has critics, too.
“This is a plan to turn a valuable state asset into an unmitigated disaster,’’ said Rep. Kevin Boyce, a Columbus Democrat and former state treasurer and investment banker. “Other states have tried this and in no state has privatization lived up to its hype.’’
Illinois made news in 2010 when it became the first state to hire a private firm to manage its lottery. On Aug. 15, 2014, Illinois Gov. Pat Quinn canceled his state’s lottery management contract after the company fell nearly a half-billion dollars short of its promised revenue in year three of a 10-year contract, the Chicago Tribune reported.
New Jersey paid a firm $1.8 million in 2011 to study its lottery and suggest improvements. The firm recommended privatization even though it determined that New Jersey’s lottery had growing sales and the highest profit margins of any in the country. Gov. Chris Christie hired Northstar New Jersey Lottery Group to run the games. The new firm missed its revenue target by $24 million in the first year and trailed by $64 million the first seven months of this fiscal year, Philadelphia Magazine reported.
Indiana hired GTECH to do its Lottery marketing and operations, but re-negotiated the deal in June after admitting that GTECH would never hit its promised revenue targets, reported The Times of North West Indiana. Instead of cancelling the 15-year deal and returning lottery marketing and operations to state control, Indiana secretly renegotiated its contract with GTECH Indiana to sharply reduce revenue goals.
Pennsylvania scrapped its deal with a UK-based company to privatize management of its Lottery amid ongoing concerns that the governor overstepped his authority and contravened the state constitution by signing the deal, according to Reuters.
If you want to see the RFP released by the Kasich administration lottery evaluation and consulting, take a look here.