Another Pa. State Agency Questions Lottery Deal

By Marc Levy
|  Monday, Apr 15, 2013  |  Updated 6:33 PM EDT
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Another Pa. State Agency Questions Lottery Deal

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A third state agency is pointing to potential legal problems in Gov. Tom Corbett's stalled plan to hire a British company to manage the $3.5 billion Pennsylvania Lottery.
 
The chief counsel of the Pennsylvania Gaming Control Board wrote in a letter last month that the proposed contract documents are ambiguous and do not say clearly what kinds of new gambling Camelot Global Services would be allowed to operate.
 
As a result, it is impossible to say whether it infringes on the gaming board's authority under state casino gambling laws or creates illegal forms of gambling, the board's top lawyer, Douglas Sherman, wrote.
 
"Despite the references to Keno, Internet games and monitor-based gaming, none of the mentioned documents provide a level of detail or description of the games contemplated, or the types of operations of the monitors contemplated for use in Keno or any other monitor-based game,'' Sherman wrote.

The letter, dated March 18, was a response to an analysis that had been requested by members of the House and Senate Appropriations Committees as lawmakers sort through legal questions raised previously by state Treasurer Rob McCord and Attorney General Kathleen Kane.
 
Corbett, a Republican, has not sought lawmakers' approval in his attempt to hire Camelot on a 20- to 30-year contract to manage one of the nation's largest lotteries. It is a key test on privatization for Corbett, who promised when he ran for governor that he would look to privatize some state services.
 
Corbett has said he believes Camelot can produce higher and more stable lottery profits for the state programs that benefit the elderly. Democratic lawmakers have criticized Corbett as simply diverting hundreds of millions of dollars from programs for the elderly to a foreign company.
 
In December, McCord told Corbett's administration that he may not pay the company until he was satisfied that Camelot's vague plans to expand lottery gambling were clearly legal under state law.
 
Then in February, Kane rejected the contract, saying parts of it, including its expansion of gambling, contravene the state constitution or are not authorized by state law. The attorney general's office reviews state contracts for form and legality, and Kane's office insisted that the contract's rejection was not politically motivated.
 
The gaming board's viewpoint might be seen as less partisan than that of Kane or McCord, both of whom are Democrats. The agency is chaired by Bill Ryan, a Republican and a former top lieutenant of Corbett's when he was attorney general before becoming governor in 2011.
 
Corbett said last month that his administration plans to resubmit the proposed contract to Kane after revising it, although it has not said what changes it would make.
 
On Monday, a spokeswoman for Corbett's Department of Revenue, which oversees the state lottery, said the administration expects that its changes to the contract will provide clarity for the gaming board.
 
However, the spokeswoman, Elizabeth Brassell, said the administration is not asking lawmakers to change state law to solidify the legal case for the Camelot contract.
 
Administration officials have told lawmakers that they would change it to address concerns by Republican senators to make it clear that Camelot cannot drive the Pennsylvania Lottery into competition with casinos through online gambling.
 
The contract with Camelot remains the subject of a court challenge by several Democratic lawmakers and the union that represents lottery employees.

Three other states, New Jersey, Indiana and Illinois, have awarded contracts to private lottery managers.
 

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