Pa. treasurer questions lottery expansion plans

HARRISBURG, Pa. (AP) -- The private company seeking a contract with Gov. Tom Corbett to run the Pennsylvania Lottery may not get paid unless its plans to expand lottery gambling are clearly legal under state law, Treasurer Rob McCord said Wednesday.

McCord's position could be a blow to Corbett's plans to possibly hire Britain-based Camelot Global Services, the only bidder for a 20-year contract to manage one of the nation's biggest lotteries. It could also force Corbett to seek specific approval from the Legislature to allow the Pennsylvania Lottery to operate keno or online lottery games.

McCord said Camelot's plans to increase lottery revenue by expanding gambling are vague. Also, the management agreement proposed by Corbett's Department of Revenue appears to grant Camelot "unfettered discretion" to expand lottery gambling to the point where it exceeds state lottery law or conflicts with laws on casino gambling, McCord said.

"Accordingly, please be advised I will not authorize the expenditure of public funds for lottery expansion unless I am satisfied such an expenditure is legally permitted under existing law," McCord wrote to the Department of Revenue, whose employees currently operate the Pennsylvania Lottery.

A department spokeswoman did not immediately respond to a request for comment Wednesday.

Corbett has said he is exploring privatization of the lottery management to see if a private company can do a better job ensuring that lottery profits keep pace with demand for programs that benefit the state's growing elderly population. Only a couple of states have given private companies the right to manage their lotteries.

The Corbett administration said last month that expanding lottery gambling to keno and online games will be one of the best ways to produce more revenue from the $3.5 billion lottery system. Administration officials believe they have the legal authority to allow keno and online games without the Legislature's approval, but some lawmakers and their staff lawyers question whether that is the case.

"We don't believe that there's authorization for the administration to expand gaming," Senate Minority Leader Jay Costa, D-Allegheny, said Wednesday. "We believe that is a responsibility left to the Legislature and it's not been delegated to the administration."

McCord said he supports Corbett's efforts to increase lottery revenue. But he questioned Corbett's drive to allow a gambling expansion to proceed under a private lottery manager.

"The use of the state contracting process to delegate future lottery expansion is an extraordinary grant of discretion and authority and has given rise to public questions concerning its legality," McCord wrote.

He said the only apparent limitation within the proposed management agreement with Camelot is that it obtain all "governmental approvals" that may prove necessary.

"Unfortunately, it is unclear by whom or when such governmental approvals are deemed necessary," he wrote.