Out of Control Policy Blog

Will Illinois Take the Lead on Lottery Privatization?

In my last update on the potential privatization of the Illinois Lottery, I really didn't expect it to proceed this fast:

Illinois legislators could vote this week on a plan to lease the state lottery to a private contractor and use to the proceeds to improve roads and public buildings.

The plan would have the gaming companies bidding to operate the lottery and collect 80 percent of lottery revenues for an extended period such as 40 or 50 years.

The winning bidder would make an up front payment the state could use immediately. The lottery generates $650 million annually for the state.

"I'm going to take a clothespin to Springfield and stick it on my nose when I vote for this," said Rep. Patrick Verschoore, D-Milan. "It stinks. But roads in Illinois are in awful shape and we need new school buildings. What we really ought to do is raise the frickin' income tax to pay for all of this."

Many lawmakers share that sentiment -- the benefits of immediately improving roads and public buildings through a capital bill outweigh the loss of a long-term money-making asset.

Full piece here. Illinois can take prime mover advantage in the lottery privatization arena by acting soon; many other states are looking at it, but no one has yet gone the distance.

I do still find it very interesting that Illinois is the state where we keep seeing the newest space in U.S. infrastructure public-private partnerships (PPPs) being created. Most of that credit goes to Mayor Daley--in the last three years alone, you have major PPP deals for the Skyway, the downtown parking garages, Midway Airport (in the works), and the city's parking meters.

These are not just neat PPP initiatives; they are trendsetting. Just as the Skyway launched the major interest in toll road concessions, and as Midway would surely do for airport P3s, I'd predict that a lease of the Illinois Lottery would prompt a race between Gov. Daniels, Gov. Schwarzenegger, Gov. Patterson, and several others for which state comes next.

UPDATE: As Illinois decides whether or not to proceed, it's worth keeping an eye on the privatization of the Turkish national lottery system, for which the tendering process is nearly set to begin.

» Reason's Annual Privatization Report 2008
» Reason's Privatization Research and Commentary

Leonard Gilroy is Director of Government Reform


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