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Senate of Pennsylvania
Session of 2013 - 2014 Regular Session

MEMORANDUM

Posted:	January 11, 2013 11:41 AM
From:	Senator Jay Costa
To:	All Senate members
Subject:	Lottery Privatization Oversight

Please join me in sponsoring legislation introduced as Senate Bill 1574 in the 2011-2012 legislative session by Senators COSTA, HUGHES, FONTANA, BOSCOLA, KASUNIC, TARTAGLIONE, SCHWANK, YUDICHAK, WOZNIAK, FARNESE, STACK, FERLO and BREWSTER, that would set parameters for Governor Corbett’s proposal for private management of the Lottery and guarantee protections for senior citizens who are served through programs funded by the Lottery. The intent of this legislation is not to interfere with the private management option. It does, however, provide openness, accountability and scrutiny to the process. The plan seeks to create guarantees so that the operations and programs of the lottery do not ever become victimized by private for-profit motives. This proposal is based on a similar initiative in Illinois. The legislation establishes the following guidelines for any private management contract with the lottery: - A contract cannot be longer than five years; - Control is exercised over all significant business decisions; - Decisions by the private manager may be countermanded; - Right to demand information concerning any aspect of the lottery; - Advanced notice of any operating decision that impacts public interest (internet gaming); - Fee and bonus structure; - Principal office must be located in Pennsylvania; - Minority-owned business set aside a percentage of the contract. The contract must be by open and public bidding. The selection is through a competitive request for qualifications process based on stringent bidding protections. The language stipulates tough conflict of interest disclosure provisions including all financial relationships and establishes open disclosure windows before and after the contract is awarded. The legislation requires the Department of Revenue to select at least two candidates as finalists. A detailed public hearing schedule is outlined as a part of the selection process and identification of the finalists is assured. The Governor may accept or reject the department’s recommendation. The reason for the selection must be explained publicly. The private manager is subject to a complete investigation in the 3rd and 5th years. The department must also submit quarterly reports to the General Assembly on the actions of the private manager. This legislation ensures that valuable programs that have served seniors and the disabled for generations are not threatened. The plan places important controls into the process and makes certain that programs are not jeopardized, workers threatened and guarantees proper oversight. If you wish to join me in sponsoring this legislation. Thank you for your attention to this important matter.

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