HARRISBURG, Pa. (AP) – Gov. Tom Corbett’s effort to hire a private firm to manage the $3.7 billion Pennsylvania Lottery will be allowed continue past the latest deadline, a spokeswoman said Wednesday.
A spokeswoman for Corbett’s Department of Revenue, which oversees the lottery, said Camelot Global Services had agreed to extend the life of the company’s bid until Oct. 29. The deadline was Friday.
The extension is the eighth agreed to by the operator of British national lottery. Corbett, a Republican who is a proponent of privatizing government services, began searching for a private manager in early 2012 and chose the only bidder, Camelot, in January.
But state Attorney General Kathleen Kane rejected the proposed contract with Camelot in February. Kane said state law did not allow the governor to privatize lottery management or sanction the expansion of gambling the contract would permit. Her office also concluded that a management fee that Camelot can claim was unconstitutional.
Corbett has not sought to change the law through the state Legislature, where the idea to hire a private lottery manager has been unpopular.
Instead, Corbett’s staff has been working for months to rewrite the agreement with Camelot to overcome Kane’s objections. It still faces a legal challenge from a state employees’ union, as well as a threat from state Treasurer Rob McCord that he will not cut checks to Camelot unless he is satisfied that its plans to expand gambling are legal.
Corbett has said he believes Camelot can produce higher and more stable lottery profits than the state employees who currently run the operation. However, Democratic lawmakers and the employees’ union have criticized the plan as simply diverting money from programs for the elderly to a foreign firm at a time when the state employees are running the lottery well.
Corbett’s agreement with Camelot is for 20 years. Camelot guaranteed at least $34 billion in profit to the state in that period and could earn another 10 years in extensions if it meets certain performance benchmarks. It was allowed to charge a management fee of hundreds of millions of dollars over the life of the deal and receive cash incentives for exceeding its annual profit commitments. Those incentives were capped at 5 percent of annual profits.
Three other states, New Jersey, Indiana and Illinois, have hired private lottery managers.
(Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)