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States Consider Leasing Lotteries For Instant Cash
SPRINGFIELD, ILLINOIS --
States have grown increasingly desperate in their need to collect revenue. While gambling sources have contributed mightily to state coffers around the United States, some states have found even that golden goose insufficient.
The latest plan involves leasing state lotteries to private companies. In exchange for a lump sum up front, certain states are considering handing over their lotteries for a set number of years.
Illinois legislators are currently debating such an idea. For an amount around $10 billion, Illinois might lease away its lottery, allowing a private owner to collect on losing lottery tickets for years. The state would use the money for badly needed infrastructure.
Indiana also considered such a plan, but dropped it in anticipation of legal trouble from the federal government. Lotteries are illegal by federal law, with an exemption given to states only. A leasing program may violate the provisions of the exemption.
Still, Illinois plans to research the law to see if a structure could be devised that allows privatization while still meeting federal requirements. One aspect of a privately owned lottery would be the ability to generate much greater returns on the invested money, allowing for both larger prizes and profits.
Still, legislatures both federal and state must deal with the limit of their budgets at some point. While casinos, lotteries, and other gambling sources have proved valuable revenue producers, there comes a time when bloated expenditures must stop.
Selling or leasing the lottery seems awfully similar to lottery winners who sell off their annuity to get a lump sum, which is significantly smaller than the present value of the annuity. It is a mark of penny wise, pound foolish management.
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