January 23, 2007

Here's the next bad idea coming to Texas

It's always good to look at other states and see what kind of stupid things their leaders are doing. It's a nice way of finding out, many times, what's going to come out of the mouth of some idiot Republican here in Austin. Like Dan Patrick. Or Mike Krusee.

Illinois is thinking about privatizing their lottery organization to raise money for schools.

The state of Illinois is hoping to attract investors to pay as much as $10 billion in a jackpot bid for its lottery system, according to a newspaper report.

The sale of the system is likely to be one of the biggest privatizations of a state-run program and may occur as soon as the spring, The New York Times reported.

Illinois will receive a multibillion dollar one-time payment as the sale is expected to raise more than $1 billion with annual payments of $200 million, the Times said.

"Gambling is getting so competitive around the world that we're worried our revenues could go down unless there is retail expertise," John Flilan, chief operating officer of Illinois, said to the paper. "This is fundamentally a retail business and governments are not equipped to manage retail business."

Last year, the lottery collected revenue of nearly $2 billion and profits around $630 million. The new owner would receive all revenue and profit for 75 year, the Times said.

So, you're going to give up $430 Mn annually for a one time payment of $1 Bn? Gee, this seems really smart. Oh, but then there is the fear that if we don't give it up, they will start losing revenue because of a lack of retail expertise, per Joe Flilan. I guess Joe never thought of hiring someone with retail expertise? You know, to walk him through the complexities of running a lottery as a retail business...

Let me say it again... selling off assets only makes sense if you can do so at a premium. That's not the case here and it won't be in Texas, either.

Posted by mcblogger at January 23, 2007 11:03 AM

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Last week I wrote a post about IL's efforts to privatize their lottery. I wrote at the time that it was a bad idea on a variety of levels and that supposed need to do this really driven less by... [Read More]

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