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State lawmakers could consider privatizing lottery next week
By Kurt Erickson
kurt.erickson@lee.net
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UPDATED 3:15 p.m. SPRINGFIELD -- Illinois was the first state to openly talk about selling or leasing its state-run lottery as a way to generate cash without raising taxes. | Penny-pinching IDOT didn't stop buying new cars

And now, more than two years after the concept was floated by Gov. Rod Blagojevich, there are signs the Land of Lincoln is inching closer to becoming the first state to actually approve the idea.

With an eye on jumpstarting a long-dormant statewide construction program, House Speaker Michael Madigan, D-Chicago, has called the House back to Springfield next week, possibly to act on plan to lease the state lottery to a private vendor.

Although few details about the plan were emerging Wednesday, it is expected that the proposal would bring in a one-time cash infusion of about $10 billion, most of which would go toward financing road, bridge and school construction projects.

State Rep. John Bradley, D-Marion, a key player in blocking a previous lottery lease proposal, sees the latest development as positive.

“It’s not a bad sign,” Bradley said Wednesday. “Hopefully, people will work in good faith.”

If approved, Illinois would be alone in the nation in privatizing its lottery.

Gov. Rod Blagojevich first floated the concept in 2006, saying the proceeds could be used to shore up the state’s under-funded pension systems without raising taxes.

The plan, however, was not embraced by the General Assembly, as critics worried that the loss of a steady stream of revenue would hurt funding for other state programs, such as education.

But, the seed planted in Illinois spread across the nation.

At least ten states have openly discussed the concept, including Texas, Indiana, Vermont, California, Florida, Massachusetts, New York, Michigan and Colorado.

In each of those states, the idea has fallen flat among lawmakers.

Arturo Perez, fiscal analyst with the National Conference of State Legislators, says a prevailing concern among the states is the loss of control over an asset.

In addition, Perez said there are concerns private companies will be more beholden to investors than state taxpayers, meaning they will push the envelope on expansion.

“One question that is asked is whether you are going to see lottery kiosks everywhere you go,” Perez said.

To address concerns of lawmakers about losing their ability to rein in lottery companies, Illinois could impose restrictions on lottery expansion and new games.

It is not clear, however, if lawmakers will consider those types of restrictions when they meet Wednesday and Thurday.

A lottery lease plan approved by the state Senate in May did not specifically address the issue. The legislation was killed by a House panel chaired by Bradley on the final day of the General Assembly’s spring session.

It’s also not clear whether the latest round of talks will result in anything moving forward. Infighting among Democrats who control state government has kept the issue bottled-up despite widespread agreement that a construction plan is needed.

Democrats in the House say a key part of any deal centers on spelling out exactly which projects the money will be spent on.

In a sign that relations between Blagojevich and Madigan remain strained, it doesn’t appear the governor has a seat at the table in the latest discussions.

“We have not been involved in Speaker Madigan’s plan, though we expect they will brief us prior to an announcement,” said Blagojevich spokeswoman Kelley Quinn.

The Senate is not planning to meet next week, but a spokeswoman for Senate President Emil Jones, D-Chicago, did not rule out a return.

"We have to wait and see what the House gets done," said Cindy Davidsmeyer.

Meanwhile, it’s not just state officials who are interested in securing this one-time influx of cash.

Behind the scenes of the lottery push are major investment banks, which have dedicated staff to guide states toward a sale.

Illinois, for example, has retained the services of Goldman Sachs, UBS and Scott Balice Strategies.

Among those involved in other states is Bradley Tusk, a vice president at Lehman Bros. and a former top aide to Blagojevich.

Reports note that Tusk, who served as deputy governor of Illinois, has advised officials in other states about the process needed to get a sale underway.

Perez said the interest in the idea by Wall Street is simple:

“Do they stand to gain in this? Yes,” Perez said.

Take a look
With an eye on jumpstarting a long-dormant statewide construction program, House Speaker Michael Madigan, D-Chicago, has called the House back to Springfield next week, possibly to act on plan to lease the state lottery to a private vendor. (AP File Photo/Seth Perlman)
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Reader comments on this story - 18 total

Note: All views and opinions expressed in reader comments are solely those of the individual submitting the comment, and not those of the Pantagraph or its staff.

The Original JD wrote on Sep 5, 2008 1:59 AM:

" To: Country Girl - The money from the lottery DOES go into the school budget. What they do not tell you though, is that they take an equal amount out of the appropriated budget and move it elsewhere. In the end, the schools get nothing. Many of us knew the politicians would do this when they used the schools as a selling point, but the majority (as usual) fell for the political speel hook, line, and sinker. People need to realize that American government exists to propagate itself. If it seems they care about you, it is just pandering to get your vote. "

JimmyChooGirl wrote on Sep 4, 2008 3:57 PM:

" la duderina - Nope not dumb, just don't know everything about everything and don't pretend too.

Thanks Michelle & Mule : ) "

Country Girl wrote on Sep 4, 2008 1:26 PM:

" OK, I know you bloggers will correct me if I am wrong. I remember when they first started the lottery as a way to fund schools. Now we all know how well that worked. Now they want to "lease"-sounds more like selling with only a 1 time payout-for road, bridge and school construction. How much will $10 billion get done? How much of that will be North of I-80? We've bailed out the CMT, and Amtrak. Come on lawmakers send Blago back to Chicago with his tail between his legs. VOTE NO "

Jarhead71 wrote on Sep 4, 2008 7:14 AM:

" Since this is probably the dumbest thing ever conceived in Chicago, it will probably get passed unanimously by our pay to play leftislature. The Original JD is correct, "the idea just does not make sense". I know, let's sell the governor's mansion. It is unoccupied and will bring in a quick infusion of cash. "

The Original JD wrote on Sep 3, 2008 10:57 PM:

" So let's see. We sell the lottery for a 1 time cash infusion to be spent on stuff that historically needs to be done every few years. Isn't that selling the golden goose for 1 egg? Sure, it sounds good on the surface, but it is getting rid of an item that generates money every week, and spending the money you get for selling it on an item that could be considered perishable. Sorry, but the idea just does not make any sense. "

livingstoncountyblog wrote on Sep 3, 2008 10:49 PM:

" Think the lottery generates around 500-700 million. "

the dispeptic skeptic wrote on Sep 3, 2008 9:21 PM:

" What a stupid thing to do. Expanding casinos is another stupid thing to do. Has anyone researched the impact casinos have on crime? On the busloads of elderly people the casinos bring in on social security payday? On the number of people the casinos addict to gambling who have lost their homes, their savings, their families, and their hope? Shame on the government for fleecing the poor to fund their greed. "

Nush wrote on Sep 3, 2008 8:19 PM:

" We're governed by a bunch of idiots and we've got no one to blame but ourselves...Both our apathy at the polls and our reluctance to put new blood in office by continually re-electing our "known evils" has ruined this state...

At least I have the satisfaction of knowing that these bozos will one day get their just desserts when they face the TRUE ruler.... "

wkndwrrior79 wrote on Sep 3, 2008 7:48 PM:

" I've been saying this for a few weeks now. THis is why Bago has been threatening to cut out/close state parks, so the public will bow down to what he wants "

michelle24 wrote on Sep 3, 2008 6:01 PM:

" Dang, el duderino~ kind of harsh, don'tcha think? JimmyChooGirl an honest gal, and I respect her for it. "

candy wrote on Sep 3, 2008 4:14 PM:

" Get this guy out of here! That money will be GONE in a second, and then we will have no revenue from it for YEARS. What an idiot. I wish he would just spend the money he has already intelligently. "

el duderino wrote on Sep 3, 2008 4:13 PM:

" JimmyChooGirl- On the surface, this idea is a lot like you, in that it seems kind of dumb. "

Gov't oppressed Mule wrote on Sep 3, 2008 3:49 PM:

" TO: JIMMYCHOO

My belief (so don't quote me) is that instead of taking the income from the lottery, we would instead take a one time cash payment from a company that wants the income. That company would then run the lottery. We would, in essence, save money on staff and payouts, but we are losing the income generated through the lottery service. Now I may be wrong and if so, please someone correct me. But leave it to Illinois politicians to skin the golden goose for a one time "quick fix." "

keep-sarcasm-alive wrote on Sep 3, 2008 3:05 PM:

" I'm not really familiar with how much the lottery generates per year for the state. Does anyone know? "

bnilguy wrote on Sep 3, 2008 2:57 PM:

" What will offset the revenue loss? The 1 time infusion will be gone in no time, even if it's to noble projects "

2tired wrote on Sep 3, 2008 2:41 PM:

" This could be one of the dumbest thing done in a long time, why not sell off everything that generates income. If this happens I know there will be a bunch of Illinois congressmen looking for employement "

JimmyChooGirl wrote on Sep 3, 2008 2:36 PM:

" Okay my blondeness is in full force today and I am confused. :) I hope someone will enlighten me...what would this change mean for us common folk that buy lottery tickets? "

OGS wrote on Sep 3, 2008 2:32 PM:

" This is another Blago ripoff! Say No TO Blago! Do not sell infrastructure, do not sell assets, do not sell out the people of Illinois, do not sell out the U.S.A.! And anyone who does, should be tried for treason,,,period! "
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