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Saturday, October 13, 2021

Considering how government-run lotteries rely upon the lure of the big-purse payout to sell tickets, there’s some irony in how some states are regarding the privatization of their lotteries as billion-dollar jackpot opportunities.

“I think there is so much potential there,” [California Governor Arnold Schwarzenegger] told reporters. “We have gotten numbers all the way up to $37 billion. So I think the question really is, should we not really start thinking creatively here?”

Like shoppers at convenience stores who can’t resist placing bets when lotto jackpots get big enough, government officials in at least a dozen states are considering lottery privatizations — what would collectively amount to the biggest privatization of a government enterprise in American history.

In addition to California, investment-banking proposals for lottery-agency buyouts have been prepared for Indiana, Florida, and Texas. Other states, including big ones like New York and Illinois, are strongly considering the move.

The social issues are well-known: Lotteries, regardless of their best-intentions positioning as fundraisers for education, are essentially regressive taxes, and they appeal disproportionately to those who can least afford to sink money into them. And the fundamental issue is whether or not states should sell a high-profit margin operations for one-time lump sums, or else lease them with restrictions that would devalue them in the eyes of prospective investors.

But what I find most interesting is the appeal this concept holds for small-government proponents:

“It appeals to the governor because the state can get out of the gambling business,” says Robert Black, a spokesman for Gov. Rick Perry of Texas.

Which is ludicrous, since even a wholly-privatized lottery would still be subject to some degree of regulation, just as parimutuel gaming and casino licenses are. But the idea that a divestiture, at any level, could be presented as a cleansing from direct involvement in games of chance, is what makes this palatable for some statehouses.

by Costa Tsiokos, Sat 10/13/2007 07:42:56 PM
Category: Business, Politics
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3 Feedbacks »
  1. Inasmuch as I have some qualms about my state being in the gambling business in the first place, I suppose I would applaud a buyout - except that our lottery is falling way short of expectations and probably wouldn’t find a buyer.

    Comment by CGHill — 10/14/2007 @ 09:59:04 PM

  2. That just means it’s an underperforming asset, meaning anyone who buys Oklahoma’s lotto will really ramp up the aggressive marketing tactics, with videogames, poker, etc.

    Comment by CT — 10/14/2007 @ 10:51:57 PM

  3. Were it that simple, we could just sell the Legislature - talk about “underperformers” - and be done with it. :)

    Comment by CGHill — 10/18/2007 @ 09:51:26 PM

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