William White
Professor Eckstein
Public Financial Management
August 10, 2015
Privatizing Lotteries - The Advantages and Disadvantages
There are many advantages and disadvantages to Privatizing Lotteries. States such as Illinois, Indiana and New Jersey have all privatized their state lotteries. The funds that come from lotteries go towards no particular purpose. For example, the 21 states that participate in Powerball along with the District of Columbia will garner at least $114 million from the $380 million in tickets bought for a jackpot of $295 million. Iowa uses the money for their general fund; Colorado uses these funds for environmental purposes and Montana uses the money for school aid and crime control (Libaw 2001). From the $295 …show more content…
“Daily fantasy site DraftKings said this week it had received a $300 million investment from Fox Sports, Madison Square Garden and the national leagues of baseball, hockey and soccer. Its chief rival, FanDuel, pocketed $275 million earlier this month from NBC Sports, Time Warner's Turner Sports and other investors; including Google and Comcast” (Harwell 2015). This shows that investors have a strong interest in online gambling. States could enforce sales tax on every online gambling transaction. This would increase funds for states and make a much stronger economy. If investors and advertisers were able to help to fund and promote state lotteries, more people would play and the jackpots for lottery prizes would be greater. For example, if the private firm who runs the lottery made $1 million dollars from lottery tickets, the state of New Jersey would make $70,000 from sales …show more content…
These states include Illinois, New Jersey and Indiana. “Illinois was the first state to enter into a private management arrangement, but after three years, it appears to be ending its experiment nearly half a billion dollars behind the revenue projections promised by the winning bidder and with no truly game-changing innovations in the way the lottery performs” (Weld 2015). Illinois privatized their lottery system in 2011 by contracting with Northstar Lottery Group. The partnership was led by GTECH and Scientific Games. A half a billion dollars is a wide revenue gap. This failure would make people question the idea of privatizing lotteries. One major flaw to Illinois’ idea to privatize its lottery was that “sales representatives that worked for the state prior to the contract remained state employees but were managed by Northstar” (Gilroy 2014). This would mean that the state of Illinois would still be responsible for employee’s compensation and benefits. This also would mean that they did not fully privatize their lottery system. Illinois should have kept a liability that would generate revenue. Illinois kept employees on their payroll to avoid dealing with labor unions who represent these employees. It would have been a completely privatize the lottery, versus only privatizing certain segments. Northstar had a difficult time managing employees who were a part of a union and could not reprimand (Gilroy
Professor Eckstein
Public Financial Management
August 10, 2015
Privatizing Lotteries - The Advantages and Disadvantages
There are many advantages and disadvantages to Privatizing Lotteries. States such as Illinois, Indiana and New Jersey have all privatized their state lotteries. The funds that come from lotteries go towards no particular purpose. For example, the 21 states that participate in Powerball along with the District of Columbia will garner at least $114 million from the $380 million in tickets bought for a jackpot of $295 million. Iowa uses the money for their general fund; Colorado uses these funds for environmental purposes and Montana uses the money for school aid and crime control (Libaw 2001). From the $295 …show more content…
“Daily fantasy site DraftKings said this week it had received a $300 million investment from Fox Sports, Madison Square Garden and the national leagues of baseball, hockey and soccer. Its chief rival, FanDuel, pocketed $275 million earlier this month from NBC Sports, Time Warner's Turner Sports and other investors; including Google and Comcast” (Harwell 2015). This shows that investors have a strong interest in online gambling. States could enforce sales tax on every online gambling transaction. This would increase funds for states and make a much stronger economy. If investors and advertisers were able to help to fund and promote state lotteries, more people would play and the jackpots for lottery prizes would be greater. For example, if the private firm who runs the lottery made $1 million dollars from lottery tickets, the state of New Jersey would make $70,000 from sales …show more content…
These states include Illinois, New Jersey and Indiana. “Illinois was the first state to enter into a private management arrangement, but after three years, it appears to be ending its experiment nearly half a billion dollars behind the revenue projections promised by the winning bidder and with no truly game-changing innovations in the way the lottery performs” (Weld 2015). Illinois privatized their lottery system in 2011 by contracting with Northstar Lottery Group. The partnership was led by GTECH and Scientific Games. A half a billion dollars is a wide revenue gap. This failure would make people question the idea of privatizing lotteries. One major flaw to Illinois’ idea to privatize its lottery was that “sales representatives that worked for the state prior to the contract remained state employees but were managed by Northstar” (Gilroy 2014). This would mean that the state of Illinois would still be responsible for employee’s compensation and benefits. This also would mean that they did not fully privatize their lottery system. Illinois should have kept a liability that would generate revenue. Illinois kept employees on their payroll to avoid dealing with labor unions who represent these employees. It would have been a completely privatize the lottery, versus only privatizing certain segments. Northstar had a difficult time managing employees who were a part of a union and could not reprimand (Gilroy