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Indiana lottery seeking ideas from private firms

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The Indiana State Lottery Commission endorsed a plan Wednesday to seek out private companies to take over some operations of the Hoosier Lottery, a state agency whose income has shrunk in recent years.

Hoosier Lottery spokesman Al Larsen said the effort's goal isn't to privatize the lottery, but to see if companies have ideas for improving some of its operations — functions they could potentially take over if the state likes their ideas and eventually awards them contracts.

Larsen said the primary goal is to boost the lottery's net income, which dropped from $218 million in fiscal year 2006 to $188 million during fiscal year 2011 — a 14 percent decline.

"The whole point is to try to increase the amount of net income that the lottery produces on an annual basis. That's what's ultimately given to the state and flows back to taxpayers," Larsen said. "That's what's driven this overall — a desire to produce more net income."

The proposal was quickly criticized by House Democratic Minority Leader Patrick Bauer, who said Republican Gov. Mitch Daniels' administration had not learned from a failed privatization of Indiana's welfare-intake operations that has the state and IBM embroiled in countersuits.

"Haven't we learned from the past?" Bauer, D-South Bend, said in a statement.

A resolution unanimously approved Wednesday by the Lottery Commission's chairman and two other commission members authorizes the state to issue a request soliciting interested companies to submit proposals for improving a broad scope of services handled by the state agency.

That request issued Wednesday remains open until June 1.

The commission's resolution states that the lottery "should function as much as possible as an entrepreneurial enterprise." It also says the Hoosier Lottery's mission "is to return maximum net income to the state in a socially responsible manner."

By mid-June, the lottery hopes to identify an initial list of firms interested in bidding on handling some lottery operations. And by September, the lottery will begin accepting business plans and formal, binding offers from firms.

A Hoosier Lottery statement says the commission "will be in a position by October to determine if an award is in the best interest of the State."

Larsen said he couldn't speculate on what the operations the lottery could turn to a private company, adding that that will "be determined based on the proposed that are submitted."

"The bidders will know that the goal is to improve net income, that part of our performance, and it will be up to those bidders to let us know how they would plan to make that happen," he said.

Larsen said that regardless of the effort's outcome the lottery will remain a state agency controlled by the state.

In 2007, Daniels proposed leasing the state lottery to a private company to pay for a proposed program that would provide college scholarships to students whose families earn less than $60,000. He dropped the idea in October 2008 after the U.S. Department of Justice said such a move would not comply with federal law.

In 2006, the Daniels administration awarded a privatization contract to IBM that additionally grew to $1.37 billion to automate the state's welfare-intake system. Daniels canceled that contract in 2009 amid complaints about long wait times on calls, lost documents and improper rejections from clients and federal officials.

Indiana and IBM are now suing each other over that failed effort.

Bauer said in his statement that the welfare privatization effort "turned into a disaster so bad even the governor had to admit he made a mistake."

Daniels, who cannot seek a third term under Indiana law, will leave office in January.

"Those of us who have steadfastly fought against the move to privatize public services have been vindicated by the shoddy record of this administration's efforts in this area, but that doesn't appear to mean a thing to this governor as he lurches his way out of office," Bauer said.

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  • I Won The Lottery Contract!!!
    Here's a novel idea.

    Issue more lottery tickets that have no chance of winning.

    Now give me 10% of the $791 million you took in last year.

    Quickest $79 million I made in one year.

    Can't wait for my 100 year contract to start!!!!
  • Caution
    As a private enterprise the lottery could probably do many things to increase sales. The tricky thing is, the people who they'll probably end up getting more money from are the people who probably shouldn't be spending any more money on gaming to begin with.
  • why?
    The reason they stated (net income down 14%) is not enough. Most private companies have done much worse in the last few years due to the great recession. I understand the lottery is somewhat recession proof (so you would expect smaller decline), but this indicator alone doesn't mean much.
  • Hidden Agenda
    You forgot to mention they want to give there friends all the profits from future internet gambling operations.

    Of course the state could do this on its own, but.....

    The brick and mortar casino's in the state don't like the idea, unless they get a cut too.
  • BlaBlaMeter
    Let me help you translate Hoosier Lottery spokesman Al Larsen's comments:

    "the effort's goal isn't to privatize the lottery,(I'm Lying) but to see if companies have ideas for improving some of its operations (Because we are currently incompetent) — functions they could potentially take over if the state likes their ideas and eventually awards them contracts.(We are going to do this before Mitch leaves office regardless of the effect to taxpayers)"

    Did he really say this with a straight face?

    Al Larsen BlaBlaMeter

    http://www.flickr.com/photos/31015975@N08/2902643161/

  • Is The Lottery Stupid?
    What is the advantage they are trying to gain for taxpayers here other than giving a politically connected firm a cut of all profits?

    Is Lottery Director Karl Browning saying his organization is a disaster and that he is incapable fixing any problems?

    Isn't Karl Browning the former state CIO who was responsible for the FSSA/IBM and current Department of Revenue computer problems that are causing billions of dollars of errors?

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  1. PJ - Mall operators like Simon, and most developers/ land owners, establish individual legal entities for each property to avoid having a problem location sink the ship, or simply structure the note to exclude anything but the property acting as collateral. Usually both. The big banks that lend are big boys that know the risks and aren't mad at Simon for forking over the deed and walking away.

  2. Do any of the East side residence think that Macy, JC Penny's and the other national tenants would have letft the mall if they were making money?? I have read several post about how Simon neglected the property but it sounds like the Eastsiders stopped shopping at the mall even when it was full with all of the national retailers that you want to come back to the mall. I used to work at the Dick's at Washington Square and I know for a fact it's the worst performing Dick's in the Indianapolis market. You better start shopping there before it closes also.

  3. How can any company that has the cash and other assets be allowed to simply foreclose and not pay the debt? Simon, pay the debt and sell the property yourself. Don't just stiff the bank with the loan and require them to find a buyer.

  4. If you only knew....

  5. The proposal is structured in such a way that a private company (who has competitors in the marketplace) has struck a deal to get "financing" through utility ratepayers via IPL. Competitors to BlueIndy are at disadvantage now. The story isn't "how green can we be" but how creative "financing" through captive ratepayers benefits a company whose proposal should sink or float in the competitive marketplace without customer funding. If it was a great idea there would be financing available. IBJ needs to be doing a story on the utility ratemaking piece of this (which is pretty complicated) but instead it suggests that folks are whining about paying for being green.

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