New Castle News

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September 2, 2013

Mitchel Olszak: Pennsylvania’s gambling dependency

NEW CASTLE — Privatization of public services can be a good thing.

But not always. These matters always warrant a case-by case assessment.

Ideally, privatization serves the public interest when it promotes innovation, efficiency and perhaps even some measure of competition. Private businesses handling public services may have a financial incentive to perform better that government agencies don’t possess.

But privatization doesn’t always work. If the move simply creates another level of bureaucracy and adds to consumer costs, what’s the benefit? At times, privatization can be little more than a scheme to direct public funds to politically connected cronies.

The current federal charges involving the former director of the cyber school program in Beaver County could turn out to be an example of that.

Last week, the Corbett administration announced an extension of an agreement with a British firm seeking to privately run the Pennsylvania Lottery. The administration reached such a deal months ago, but it was blocked by Attorney General Kathleen Kane.

Among other things, Kane said the privatization move and expanded gambling options included in the deal were unconstitutional, because Gov. Tom Corbett was acting without legislative approval.

I believe Kane is absolutely correct. Regardless of one’s ideological perspectives on privatization, the lottery is a program created by the Legislature. And lawmakers did not authorize anything close to the changes Corbett is seeking.

Unfortunately, when the governor made his privatization push, his fellow Republicans who control the General Assembly were largely silent. Something tells me that wouldn’t happen if a Democratic governor was advocating it.

I can understand Corbett not wanting to seek lawmaker support for this plan. Getting the Pennsylvania Legislature to do anything of consequence is an ambitious undertaking.

And the governor already has plenty of experience on that point. Just ask him about liquor privatization or transportation funding.

But behind the lottery privatization issue is a more philosophical one. It involves the nature of gambling and government’s seemingly endless desire to squeeze more money from the vice.

In advocating for his lottery privatization plan, Corbett argued an outside firm would be able to generate more revenue for the programs the lottery supports. Yet the reality is that this could happen only through expanded gambling options.

In other words, the state would have to encourage people to bet more frequently on the slim chance of a big payoff.

Critics often describe lottery programs as taxes on the poor, or perhaps the gullible. It’s safe to assume that millionaires don’t bother to play the Daily Number, but people struggling for a few extra bucks do. By using the lottery to fund assorted programs for the elderly in Pennsylvania, the pressure to use tax dollars is decreased.

Defenders argue playing the lottery is a choice, not a tax. True, but from government’s perspective, the only difference is that there are no repercussions from imposing more gambling on the public, but taxes will prompt a reaction.

However, there ought to be repercussions. Gambling does not promote growth or produce a better society. It creates the false promise of something for nothing. And citizens should question government’s growing embrace of vice as a way to grab easy cash.

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