Tuesday, January 23, 2007

A Losing Ticket

The article in today's New York Times about selling off the Illinois Lottery was full of surprises. The first surprise was the lead reason being offered by the Administration for the proposal. In the words of budget guru John Filan:
“This is fundamentally a retail business, and governments are not equipped to manage retail businesses,” said Filan. “Gaming is getting so competitive around the world that we’re worried our revenues could go down unless there is retail expertise to run the lottery.”

Unless you've been living under a rock (a rock outside of Illinois, no less), the main thrust of the idea, and its timing, was widely accepted to rest in mollifying the threatened gubernatorial bid of Sen. Meeks by finding quick cash for education.

I suppose that I could have missed something, but this is the first time that I have heard that the sale is intended to boost ticket sales, something that I don't think will sit real well with those concerned about the inherently regressive nature of the lottery.

The next thing that surprised me was this short sentence:

The deadline for bids is Feb. 20.

Again, unless I have missed something, a sale of the lottery would require authorization by the General Assembly. I literally have not spoken with more than two legislators who support such a plan. The main reason tends to be that the sale provides short-term dollars but no long-term support for education funding, and will ultimately leave us worse off than we are now.

How anybody could place a realistic bid in such an uncertain, if not downright adverse, political climate escapes me.

But even if the state and the school kids don't come out ahead at the end of the day, there are at least some winners under the proposal:

Goldman Sachs and UBS are advising the state of Illinois.

So a bold-sounding plan that will likely go nowhere and generate no income for the State, may in fact wind up costing us money.

What a surprise.


At January 23, 2007 at 7:05 AM, Anonymous Anonymous said...

Here's how I'd go about it, if I were Goldman Sachs and UBS:

1. Heavily donate to the governor's campaign, the campaign of his allies, and lend support on a few of the governor's political objectives.

2. Convince the governor to merely 'take bids' on the lottery contract. These of course would be non-binding, as the GA has not authorized the sale. This will test the waters to see how much money the lottery is worth.

3. Once the bids come in, if they are high, tell the GA (and the voters) "You can get $xx billion in additional funding for your schools!"

3a. If the bids come in low, forget the whole episode ever took place. (But it won't since GS & USB know how much money can be made on this already)

4. Wait for the GA vote to authorize the sale. Should take 24 or 36 hours. Expect 70-75% (bipartisan) support.

As one of the power brokers in Springfield:

5. Congratulate Goldman Sachs and USB for winning the contract.

6. With the new money coming in, divert existing money from the education fund to other pet projects, or to projects that will give you political support.

7. Call a press conference announcing the real winners of this deal are the children, and that you can hold off increasing taxes for a few more months.

8. Get re-elected.

I like it. Everyone wins.

At January 23, 2007 at 9:00 AM, Anonymous Fed Up said...

1. Flu shots that cost us millions, yet not one Illinoisan gets an injection -

Taxpayer cost - a couple million dollars

2. An idiotic attempt to ban violent video games that does not keep one game out of the hands of kids -

Taxpayer cost for losing legal battle - over half a million dollars

3. Hiring consultants to pimp for a sale that is going nowhere -

Taxpayer cost - unknown but surely not small

4. Having a Governor with no shame about using public money to fund his incompetent efforts to look like a leader

Taxpayer cost - way too much

At January 23, 2007 at 2:14 PM, Anonymous Anonymous said...

Meeks had an opportunity to support a genuine anti-gambling and real pro-education reform reform candidate--Rich Whitney, but he instead towed the party line and propped up the status quo. Now we reap what we sow.

At January 25, 2007 at 12:28 AM, Anonymous Marie Carnes said...

Fiscal years ending:

2004 Sales total $1.7 billion
2005 Sales total $1.84 billion
2006 Sales total $1.89 billion

Up, up, up. Filan is needlessly worrying that sales will go down. Those figures are from the Lottery's own web site.

But, aside from that, whether one wants to call the Lottery a retail business or not, should not be a concern. Nor should it be a concern that gaming is so competitive around the world. The Illinois lottery should be an island unto itself that operates despite what other gaming in the world is doing. Really.

As someone who occasionally purchases Illinois lottery tickets (more as gifts, than for myself), the appeal is that "half" the purchase price goes to schools. I think that wholesomeness (for lack of a better word because it's late and I'm tired) will be lost if it's being run by a corporation. I'll bet I'm not the only who feels that way.

Please do not let this go through.

P.S. I agree with the other commenters, too.


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