States mull privatizing lotteries

NewsAnalysis

Texas Gov. Rick Perry has raised the public’s eyebrows once again. Perry’s staffers have been cooking up a scheme for six months with former Sen. Phil Gramm to sell the state’s lottery. The Austin American Statesman and Houston Chronicle have detailed the intricate web woven in this proposal.

Gramm is now an investment banker and is vice chairman of UBS, which is one of the corporations along with Morgan Stanley that would benefit from the sale of the lottery. Former Perry staffers who are now lobbyists also stand to score big. Plus, UBS recently hired the governor’s son, Griffin Perry.

UBS and Morgan Stanley have made presentations to Phil Wilson, Perry’s deputy chief of staff and a former Gramm employee, which conclude that selling the lottery over the next 40 years would be worth at least $14 billion and possibly more. The lottery currently puts $1 billion into the state tresury every year.

Gramm, a Republican, was infamous for being the darling of bankers, real estate tycoons and energy moguls when he was a senator. He was tied to the notorious savings and loan scandal, which cost U.S. taxpayers billions of dollars. Glaxo, a mega-drug company, made a corporate jet available to him for the cost of a round-trip ticket on any domestic flight during his campaign for president. His wife, Wendy, sat on the Enron corporate board. Enron was one of Gramm’s major campaign contributors.

Texas’ efforts can be seen as part of a larger effort to privatize public assets. Recently, the Chicago Skyway and Indiana Toll Road were leased to private interests. Illinois, Indiana and New Jersey are exploring the possibility of selling their lotteries.

In Illinois, public workers union AFSCME Council 31 blasted Illinois Gov. Rod Blagojevich’s plan to sell the state lottery as “anything but responsible.”

“It is never prudent to sell a public asset for a one-time lump of cash that is spent on operating costs,” the union said. “Wisconsin and Michigan in recent years both rejected lottery privatization plans as poor fiscal policy.”

Many are noting that this trend of leasing or selling off public assets is not only scandalous, but also a response to the financial crises that many states are facing. Privatization would only increase the intensity of the exploitation of working people and expand the profits of the wealthy.

Blagojevich, a Democrat, proposed the idea of privatizing the state lottery about six months ago, around the same time Perry started incubating the idea for Texas.

Accountability of a private lottery would be difficult. Rick Casey of the Houston Chronicle said lotteries prey on poor people who “see the lottery as their only way out of poverty.”

phill2 @ houston.rr.com