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* Former Gov. Pat Quinn, among others, was enamored with the idea of privatized state lottery management. And now even the program’s director thinks it may not be a good idea…
Seven years after Illinois heralded privatization as the cure for lagging lottery sales, the state’s latest lottery director now says he’s not sure the model works.
The private firm hired to manage the Illinois Lottery never met its lofty bid projections, and for 2½ years the state has said it’s been working to replace it. But the process has dragged on, even as Tribune investigations have exposed questionable actions of and payments to the firm.
Some lawmakers have questioned the lottery’s oversight of the firm, why it’s taking so long to replace the firm and whether the privatization model is even right for Illinois.
At a state Capitol budget hearing Wednesday, Sen. Heather Steans, D-Chicago, asked the lottery’s acting director, Greg Smith, about the latter. Smith wouldn’t directly say if he thought privatization was wrong in Illinois, citing the pending replacement process. But, in general, he offered a far less glowing assessment of privatization than previous lottery directors and other state officials.
“I know that two other states, New Jersey and Indiana, that all are under private management have experienced significant difficulties, and it may not mean that private management is the best approach for lotteries,” Smith said.
* Related…
* Gauen: Even if Illinois lottery cheated, can anyone prove being harmed?
posted by Rich Miller
Thursday, May 11, 17 @ 9:31 am
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Why am I not surprised?
Oh, because privatization is a false idol.
Comment by jerry 101 Thursday, May 11, 17 @ 9:44 am
Just another example of Quinn’s clueless time as governor. Worst part is, these clown’s are STILL running the lottery. What is wrong with our state?
Comment by Collinsville Kevin Thursday, May 11, 17 @ 9:51 am
Remember reading the original Lottery outsourcing bids. Every one of them.was partnered with New Frontier for the building and physical management. So you knew from the get-go that there would be extra fees and money going to some power brokers rather than the State or customers.
Comment by RNUG Thursday, May 11, 17 @ 9:52 am
Whenever you hear “privatization” you know some politically-connected company is getting the money.
Comment by Anonymous Thursday, May 11, 17 @ 9:53 am
Sweet score. Make snake oil promises and then keep getting paid while the state tries to push you out.
I take it they’re paid out of dedicated lottery funds. Other private vendors, aka social service providers, are getting bled to death as the state reneges on their contracts.
The only private vendors getting fatter at the trough are the IT pinstripe patronage boys. The wingman gave them GRF to keep their dedicated fund flush for later paydays.
Shakin’ up Springfield.
Comment by wordslinger Thursday, May 11, 17 @ 9:53 am
Adding … that was way, way back, long before the the last several Governors.
Comment by RNUG Thursday, May 11, 17 @ 9:54 am
“may not” = NO
Comment by VanillaMan Thursday, May 11, 17 @ 9:55 am
How’s that parking meter privatization deal working out for the City of Chicago?
Comment by Pundent Thursday, May 11, 17 @ 9:58 am
I was surprised the lottery was privatized at all, considering the pushback when Blagojevich first proposed it in 2007. Many of the reasons for the pushback have proven correct. But hete we are, poorer and no wiser.
Comment by My New Handle Thursday, May 11, 17 @ 10:01 am
But our current governor wants to be able to privatize more of state government, not less. And without at least trying to prove it is less costly to do (we all know how that works). AFSCME needs to keep fighting on that issue alone and make sure the public understands what doing that will mean.
Comment by anonime Thursday, May 11, 17 @ 10:30 am
So they are essentially squatters in the lottery.
Comment by Harvest76 Thursday, May 11, 17 @ 10:54 am
Wasn’t the lottery privatization championed by President Cullerton?
From a September 16, 2010 press release from President Cullerton labeled “Senate President championed first-in-the-nation plan to help fund infrastructure jobs plan” there is a statement that “one important element to pay for the jobs program is a first-in-the-nation lottery management privatization plan that Cullerton championed.” President Cullerton himself is quoted as saying that “The lottery’s own statement acknowledge that the private sector can do this better. That’s why for the past eight years, I’ve been pushing for this very change.”
Kind of odd to lead by characterizing it as something that Governor Quinn was “enamored” of.
Comment by Lou Holtz Thursday, May 11, 17 @ 11:03 am
Lou Holtz, you’re correct.
But as stated frequently here, “Governor’s own.”
Quinn signed it, so that makes him enamored.
Comment by Juice Thursday, May 11, 17 @ 11:16 am
The is a big difference between public sector business and private sector business. Both politicians and citizens of Illinois need to learn the difference.
Public sector business isn’t made to make a profit. It is there to support the citizens of the state and to serve their needs.
Private sector is to make a profit… bottom line. This is why they continue to report below earnings to save money that is required to be paid to Illinois. This is why they have been ripping off the citizens by not paying out big prizes and scamming the players.
Why anyone would sell off their revenue source is baffling to me. Privatizing public sector will never work because of the difference in the purpose of each.
Comment by OpenYourEyes Thursday, May 11, 17 @ 11:24 am
- Pundent - Thursday, May 11, 17 @ 9:58 am:
How’s that parking meter privatization deal working out for the City of Chicago?”
It would been fine if Daley II hadn’t blown the sales proceeds in two years.
Comment by Ron Thursday, May 11, 17 @ 11:26 am
OpenYourEyes, so you are saying private corps are all committing fraud.
Comment by Ron Thursday, May 11, 17 @ 11:28 am
Another very good column by Pat Gauen.
One Interesting fact that he brought out is the fact that Illinois ( prior to Northstar ) paid out close to 88% of the prizes offered on the scratch off games. Privatization dropped that payout to under 60%.
Glad I don’t play the scratch off games!
Comment by illini Thursday, May 11, 17 @ 11:34 am
In conclusion, when it comes to managing the money collected from working class people via poor financial decisions, always choose government.
Comment by City Zen Thursday, May 11, 17 @ 11:50 am
Another complete disaster was Daley II blowing the proceeds of the skyway sale.
The money from that and the parking meters should have set Chicago on a path to fiscal sanity. But of course he spent all the money in 2-3 years.
Comment by Ron Thursday, May 11, 17 @ 12:48 pm
–How’s that parking meter privatization deal working out for the City of Chicago?”
It would been fine if Daley II hadn’t blown the sales proceeds in two years.–
LOL, but that was the point of the exercise.
The guru of privatization of assets is Stephen Goldsmith, former mayor of Indy. He put city assets up for sale with lease-back deals and the taxpayers got hosed, but the muni bankers got fat.
He privatized a lot of city work and his cronies got fat. And they all bankrolled his failed run for governor.
https://www.forbes.com/sites/markbergen/2011/09/01/a-sad-end-for-stephen-goldsmith/#6dcd609856ba
Comment by wordslinger Thursday, May 11, 17 @ 12:51 pm
word, Daley spent all the money in 2 years. If it was used appropriately, as in invested and income producing, Chicago would be better off today.
But Daley never stopped spending.
Comment by Ron Thursday, May 11, 17 @ 1:05 pm
Privatization does 3 things. First it elevates the need to make a profit over any moral mandate; it removes transparency because private business makes decisions behind closed doors;and it removes accountability because private sector business can go out of business leaving the public in the lurch. Its a bad idea all around.
Comment by Generic Drone Thursday, May 11, 17 @ 1:20 pm
–word, Daley spent all the money in 2 years. If it was used appropriately, as in invested and income producing, Chicago would be better off today.–
You don’t make any sense.
If the objective was “income production,” over time, then they would have held on to the asset they’d already paid for.
Comment by wordslinger Thursday, May 11, 17 @ 1:27 pm
Chicago doesn’t have the capital to spend on upgrading the skyway and it’s spineless alder creatures would never increase the cost of street parking.
Comment by Ron Thursday, May 11, 17 @ 2:06 pm
–Chicago doesn’t have the capital to spend on upgrading the skyway …–
LOL, you have no idea what you’re talking about. There’s a documented history. Seriously, don’t hurt yourself.
Comment by wordslinger Thursday, May 11, 17 @ 2:21 pm
100% agree with word on the Skyway rehab. Just gotta know where to look, like when you’re out of cash three days before payday and you know Wifey has a cash stash somewhere.
Comment by Arthur Andersen Thursday, May 11, 17 @ 3:25 pm
==If it was used appropriately, as in invested and income producing . . . ==
You mean put into the pension funds?
Comment by Whatever Thursday, May 11, 17 @ 4:06 pm
==–word, Daley spent all the money in 2 years. If it was used appropriately, as in invested and income producing, Chicago would be better off today.–
==You don’t make any sense. If the objective was “income production,” over time, then they would have held on to the asset they’d already paid for.==
A 7% rate of return (the same rate used by our pension systems) on the $1.15B received in the parking meter deal would return $80M per year.
Per the Sun Times: The city took in $23.8 million from the meters in 2008, the last year before CPM took over the system. Chicago’s parking-meter system took in $121.7 million last year.
So one could argue that had Daley merely raised the parking rates somewhere in between 2008 and 2016 rates and achieved the same return without selling a valuable asset. That’s his biggest fail…that and the awful terms of that contract.
But Ron is right, no one forced Daley to burn through the principal.
Comment by City Zen Thursday, May 11, 17 @ 9:30 pm