Governor Mitch Daniels would be prohibited from leasing the Hoosier Lottery under a provision in the proposed budget released today by House Democratic leaders. The budget says the state may not strike a deal with a private firm to run or collect revenues from the lottery.
Even if the House approved the language, the Republican-controlled Senate would likely balk at including such a prohibition. A bill that would allow Daniels to lease the lottery for 30 years is being considered by the Senate. Unless it is approved by both houses, the governor doesn’t have privatization authority now.
“I don’t really understand the need for the (budget) provision,” said Neil Pickett, a senior policy director for Daniels. “They are prohibiting something that is already prohibited.” Then what would be the point of the Senate balking at such a provision?
If it is already prohibited then why is Governor Daniels seeking bids for the lease of the lottery? Why has he already consulted with four investment banks (whose names he won’t disclose) as to the value of the lottery?
Daniels has said this month that he is seeking a contractor that would pay $200 million a year-which is more than the lottery has earned historically-plus another $1 billion upfront for a 30-year lottery lease. A bidding war could hike the price tag even higher.
To make the hefty payments to the state that Gov. Mitch Daniels is seeking and still turn a profit, a private operator taking over the Hoosier Lottery would need to boost revenue by hundreds of millions of dollars a year.
That means an operator would have to reduce cash payouts, raise ticket prices, or market the lottery much more aggressively, perhaps even to out-of-state players, gambling and financial experts say.
It looks like the Governor is already counting his chickens before the eggs have hatched.