Fontana Discusses Pennsylvania Lottery System

Today, Pennsylvania is home to nearly 2 million people over the age of 65, more than 300,000 of whom are 85 or older. These numbers give the Commonwealth the fourth-largest senior population in the country. By 2030, nearly a quarter of the state’s population will be over age 65, and the 85-plus population is expected to grow by 80,000 people. As this population ages, so will the demand for the services the state provides.

The Pennsylvania Lottery was created in 1972 to generate funds to serve older adults. Since the first day of operations, our state’s lottery has provided $21.5 billion in funding for older Pennsylvanians through the Department of Revenue's Property Tax/Rent Rebate program; free and reduced-fare transit program; the low-cost senior prescription drug program (PACE and PACENET); a Department of Public Welfare program providing long-term living services; and 52 Area Agencies on Aging throughout the state, including hundreds of full and part-time senior community centers. Currently, 75 percent of the Pennsylvania Department of Aging budget comes from lottery proceeds.

Pennsylvania’s Lottery system has remained the only lottery in the nation to dedicate the proceeds exclusively to the needs of older residents and still has managed to become the sixth-largest lottery system in the country. Last year alone, a record $3.2 billion in tickets were sold.

Although the Pennsylvania Lottery has a solid track record of providing for its citizens, Gov. Corbett announced in April a “Request for Qualification,” which essentially would permit a private firm to manage day-to-day operations of the Lottery, including game development, sales and marketing, supply of goods and services, among others aspects. The Administration’s hopes are that these efforts would maximize the Lottery’s performance and increase revenues for senior programs.

In accordance with federal guidelines, if a private firm would be hired, the Commonwealth would still own the Lottery and retain audit abilities as well as decision-making authority over operations.

For a private management firm to advance to the next stage in the process, it would need to meet certain criteria including financial capability in an aggregate amount of $100 million or greater to cover any shortfall to financial returns. The bidder is also required to have management experience in connection with a government lottery where the revenue is in excess of $1 billion per year. The contract would be multi-year but maintain short-term termination periods.

In an effort to increase stagnant sales, former Gov. Rendell expanded marketing and availability in retail outlets by an additional 500-plus retailers, driving ticket sales from $2 billion to more than $3 billion during fiscal year 2010-11. Because of these efforts, the Pennsylvania Lottery is now available at more than 9,100 locations throughout the state. Furthermore, during the Rendell Administration, lottery staff worked to cut costs, increase efficiencies and update the business model to meet the economic challenges head on and lead to future success.

When it comes to the idea of privatizing the Pennsylvania Lottery, the theory of “if it’s not broken, don’t fix it” comes to mind. Our state’s lottery has a long history of being able to provide for our senior citizens. In fact, Todd Rucci, the Pennsylvania Lottery Executive Director, has described the Pennsylvania Lottery as one of the most efficient operations in the nation. The previous Administration has already taken initiatives to make the system more effective and efficient which has proven successful with record sales. In addition, there are no guarantees that privatizing the state’s lottery would make it more profitable in the long run, therefore, privatizing is not always the best solution for enhancing benefits and programs for our growing senior citizen population.

Senator Wayne D. Fontana

42nd Senatorial District

www.senatorfontana.com