OPPOSE HB 1496
Leasing of the Lottery
- If the State enters into a Management and Concession Agreement, HB 1496 creates the Lottery Concession Trust Fund, held outside of the State Treasury and separate and apart from all public money and funds of the state for the purpose of holding Concession revenue. (p. 75-76) The Fund SHALL BE HELD by an Illinois trustee designated pursuant to the Concession and Management Agreement. Who will get this contract?
- Amendments to HB 1496 decreased the amount of upfront cash to the State by 50%--from $10 billion a year to $5 billion, with the remaining amount within 2 years. Is this an "escape clause" for the private company to come back and say they have cannot pay $5 billion more in that short of a time?
- If the State only receives half of the "upfront money" to invest, the amount of expected revenue from dividends will be lowered considerably. How will all the construction projects and education be funded if the revenue is cut in half?
- HB 1496 allows the private company to increase the number of Lottery vendors in poor communities (poverty rate by zip code) by 10%. The Lottery is a regressive tax. Why would the State allow a private company to further exploit the poor?
- Voters approved the Lottery to fund education, not to pay for construction projects.
- Selling the Lottery will result in a massive expansion of gambling. A private company will expand the Lottery to increase sales-Keno, Video Lottery Terminals, and Internet Lottery. I. Nelson Rose, an expert on gambling law, said that selling state lotteries to private companies would result in a massive expansion of gambling since private equity funds try to make 20% profit a year (Winter, 2008 meeting in Phoenix of the National Council of Legislators from Gambling States, Jan. 4)
- HB 1496 states that the State will "retain control of the Lottery and exercise supervisory authority". The State will only get 20% of the revenue, and the one with the most money-the private Lottery Concessionaire--will control the decision, and the General Assembly will not be able to vein it in.
- HB 1496 states "The State MAY CANCEL a Management and Concession Agreement if the Concessionaire or any executive employees of the Concessionaire, is found guilty of any criminal offense related to the conduct of its business." The State will become dependent on the revenue to fund education and construction projects, and it is doubtful this "escape clause" would ever be exercised.
- Each year $600 million will be transferred from the State Lottery Fund to the Common School Fund. This is $50 million less than the School Fund currently receives. If the investment income is lower than expected, some of this money could come out of the General Revenue Fund to make up the shortfall.
- Privatizing the Lottery was tried before and failed. "Those who cannot remember the past are condemned to repeat it." - George Santayana