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States Consider Privatizing Lotteries
MONTPELIER, Vt. (Jan. 20) - Betting on the state lottery for some quick cash? Get in line: State governments across the country are thinking the same thing.

Courted by Wall Street investment houses, Vermont is one of more than a dozen states where proposals have been floated to lease state lotteries to private investors.

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Lawmakers in Illinois, Indiana and Texas have rejected lottery lease proposals in the past two years, but governors in all three states have indicated they'll raise the idea again.

In Indiana, the plan was to use revenue from a privatized lottery for a scholarship program to stem a brain drain from the state, according to Tom Osborne, an official handling infrastructure investments at UBS Investment Bank.

Texas Gov. Rick Perry, meanwhile, had cancer research on his lottery-earnings shopping list. In Vermont, Douglas wants to split the proceeds between stemming increases in the property taxes that pay for schools and chipping in for school construction projects.

"Not only will this proposal ease the financial strain on homeowners, it will help clear the backlog of school construction, giving our students 21st century learning environments in energy efficient buildings," Douglas told lawmakers in his annual State of the State address earlier this month.

Rachel Volberg, president of Northampton, Mass.,-based Gemini Research, which studies gambling and advises governments about it, said that when states run lotteries, the operations are tempered by concern for what's best for citizens. That could change if private companies were the ones drumming up the games, she said.

"Private operators running lotteries are going to be much more likely to try to introduce games that are going to be extremely profitable, and that could be very problematic in terms of gambling problems," said Volberg.


I'm not a big fan of lotteries, at least not when they are sold as a "new, addition" revenue stream, typically for school funding. Eventually, that additional revenue stream becomes the main revenue stream, replacing what would have come from general taxes. For that reason, many states already have reason to encourage gambling.

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