Reason Foundation

Reason Foundation

Lottery Privatization Back on the Table in Illinois

Leonard Gilroy
August 13, 2008, 3:03pm

Not to be outdone by Indiana Gov. Mitch Daniels' annoucement yesterday regarding the potential privatization of the Hoosier Lottery (see my post here), next door, Illinois House Speaker Michael Madigan re-opened the door to lottery privatization in the Prairie State :
A special legislative session in Springfield ended Wednesday night with no action on school funding or a capital plan. [. . .] House Speaker Michael Madigan also announced he is taking a new look at a proposal to privatize the state lottery to pay for the capital plan, which would provide money to build roads, bridges and schools.
More details to come soon, hopefully. Illinois Gov. Rod Blagojevich is certainly supportive. He ignored last year's legislative defeat on lottery privatization in his 2008 State of the State address, saying that a "partial lease of the state lottery" would "help fund up to $10 billion of a $25 to 30 billion state construction program." I had the opportunity to discuss state lottery privatization in this Fort Wayne Journal Gazette piece today:
Leonard Gilroy, director of government reform at the Reason Foundation, a free-market think tank in California, said other countries have embraced the idea but that states are slow to come on board. He thinks it will take one blockbuster deal – similar to when Daniels leased the Indiana Toll Road for $3.8 billion – to move the concept along. "The structural model is out there, but it's just a lot of legal, financial and budget details that haven't been hammered out," Gilroy said. He noted that the primary argument boils down to states losing control. But he said the contracts governing a lease can be tighter than existing regulations. "You can limit the types of games, minimum prize payouts, advertisement," Gilroy said. "In the end, private-sector businesses are better at running businesses than government. Is a lottery system a core function of government? Many would argue no. It's a business enterprise."
A few keys points to add here: For more on state lottery privatization, see the "Emerging Issues" section of our Annual Privatization Report 2008.

Leonard Gilroy is Director of Government Reform

Print This