Indiana Gov. Mitch Daniels was looking for a funding source to pay for a college scholarship program designed to keep top students in the state, said his spokeswoman, Jane Jankowski. He proposed leasing the Hoosier Lottery, a move that he estimated could bring in $1 billion up-front, plus $200 million a year and a piece of the revenue if the private operator took in more than a certain amount.
The Hoosier Lottery brings in about $200 million a year for the state, but Daniels expects that a private company would still make a profit on such a deal because it would be able to operate the lottery more effectively, Jankowski said.
FOR THE RECORD - A lottery expert from Chicago was misidentified yesterday in a front-page article about the potential privatization of the Maryland lottery. He is Michael Jones, director of Independent Lottery Research.
But that kind of thinking hasn't caught on before in Maryland. Christopher B. Summers, head of the Maryland Public Policy Institute, a market-oriented think tank, said his group has pushed for the state to consider public-private partnerships to build schools or private ownership of the planned Inter-County Connector in suburban Washington, to no avail.
"There is a large consensus against any sort of innovative ideas like that," Summers said.
Part of the opposition in the case of the lottery stems from lawmakers' desire to keep control over gambling. Sen. Nathaniel J. McFadden, the president pro tem and a Baltimore Democrat, said Maryland used to have a privatized lottery - it was called the numbers racket.
"I wouldn't want to go in that direction," he said.
Why sale opposed
But mostly, state officials cast their opposition in financial terms. Comptroller Peter Franchot, a Democrat who used to head the House committee with oversight over the lottery, said it would be a mistake to sell an asset with strong income potential for short-term gains.
"The state needs to be very cautious," Franchot said. "There are other states that are more reckless than we are."
Del. Tawanna P. Gaines, a Prince George's Democrat who chairs Franchot's old committee, said she has no intention of bringing the idea up.
"We like what the lottery is doing," she said. "It would have to be a truly compelling reason for me to even consider presenting it."
POINTS OF VIEW -- LOTTERY PRIVATIZATION
Some lawmakers in Maryland are considering the idea of selling Maryland's lottery to a private operator, a move being discussed in several other states.
The state could get a quick infusion of cash - possibly billions of dollars - to help eliminate expected deficits in the next few years
Lottery revenues, while growing, have not kept pace with the state's economy, making them a diminishing portion of the state budget
Maryland could be giving up a source of long-term revenue for a short-term gain
No other states have taken this step, so the true benefits and risks are unknown