Outsourcing deal deepens state’s gambling addiction

With the recent decision by Indiana’s lottery commission to outsource more of the state’s lottery management, the state takes another step down a potentially treacherous slope of dependence on gambling for revenue.

Horse racing tracks. Casinos. All the various lottery games. Now, basically, the state — through this new agreement — has committed to a further expansion of the lottery.

GTECH Indiana, the private management company selected by lottery officials, promises to bring the state $1.76 billion over the first five years of the 15-year contract. That’s a boost of $100 million in lottery revenue annually. To do this, GTECH will have to develop new lottery games and find more retail outlets, such as big box stores, for them. More, more, more — and it will never be enough.

Sounds like some kind of addiction, doesn’t it?

And you have to wonder how accurate GTECH’s projections are. For example, when the state saddled Hoosier Park with a $250 million licensing fee to add electronic gaming, its projections of revenue from the racing were far greater than what the Anderson facility actually has generated. A little thing called the recession got in the way.

And the state has had cautionary experiences in privatization. How did that IBM deal to privatize the distribution of welfare benefits work out? Not well.

Already, potential litigation has cast a pall over the Hoosier Lottery privatization deal. Another company, Scientific Games, bid for the contract and has protested, saying that it wasn’t given full consideration.

Now, some might point out that most of the Hoosier Lottery’s management already was privatized, and that this is just another step in the process of taking it out of the bumbling hands of government and putting it into the hands of industry experts who really know what they’re doing. Others might note that the GTECH agreement further distances state officials from gambling.

But as long as Indiana is benefiting from the Hoosier Lottery, it doesn’t matter whose hands are on the controls; it’s still a state-sponsored, state-promoted program.

Indiana is just the second state to give such broad control over a lottery to a private management company. The other, Illinois, already is in arbitration with its vendor, Northstar Lottery Group, after the company failed to reach the $825 million it had promised the state. Still, lottery revenue set record highs during the first year of management by the private company.

Indiana, perhaps, can expect the same thing. More money than ever before. And more headaches. Such symptoms can be expected when you’re feeding a voracious addiction.

Distributed by Hoosier State Press Association.

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