Privatizing the Indiana Lottery

I hate using privatizing. That sounds like the lottery will be open to all to invest in and generally be subject to the free market. What this means is transferring a government monopoly to a private monopoly.

What is wrong with a private monopoly? Generally, I am pretty tepid about the lottery but I do recognize that there is a strong morals argument against the lottery. The public may at some time decide that the moral argument trumps the argument that it means fewer taxes. Being in public hands allows that change. I suspect the Governor's lottery plan will sharpen any moral argument against the lottery. For how what will a private entity want? More profits. How will the private entity get more profits? Expand gambling. From today's Indianapolis Star, the General Assembly is trying to limit that expansion already:

The bill includes limitations on how a company could accomplish that. For instance, a contractor would be prohibited from launching Keno, video lottery terminals or types of games that do not already exist.

It also includes safeguards such as requirements for regular audits, a security program and minimum payouts, though the amount of those payouts is not specified in the bill.

The company, however, still would have leeway to make many decisions about how it operates. Jack Crawford, who led the Hoosier Lottery in 1989, said that could affect areas such as marketing.

"I think the Hoosier Lottery has been very careful to not push the envelope and not use false advertising or exaggerated advertising about the possibility of winning," said Crawford, now an Indianapolis defense attorney.

A private company might not have the same scruples, he said.

Thanks to Taking Down Words for the link to the article. I had not gotten around to the Indianapolis Star today. TDW has been doing a great job of keeping an eye on the Governor's lottery scheme. I would also point out this editorial from The Age in Australia:

For the most part, whether Tweedledum or Tweedledee gets the lottery licence begs the real question of why Victoria needs a private franchisee to run the lottery. The issue is not simply one of efficiency. It is primarily a question of power. Depending on the length of the franchise, Tattersall's has tens of millions to lose and its Greek competitor, Intralot, has tens of millions to gain if Intralot gets the lottery franchise.

And what of efficiency? What we mean here is the skill of the franchisee in marketing - which means selling more, rather than less, lottery tickets. Is welfare increased if Intralot can persuade the average Victorian to buy five scratch tickets a week instead of two?

And why do we have scratch tickets? As I understand it, it is to provide instant gratification, which comes close to replicating the experience of playing the pokies - the heroin of gambling. At least the purchase of a lottery ticket can induce pleasant dreams for the week or so between buying the ticket and the draw.

Why, before the beauty contest between Tattersall's and Intralot was set in train by the Government, didn't the Government inquire into the real choice? Instead of issuing a new lottery franchise, put lotteries back in public ownership run by the state, as occurs in WA and many other places for the obvious reason that it's cheaper and avoids corruption.

Between Australia and Indiana, the only difference seems to be that Australia's province of Australia already has a private franchise for its lottery. The problems we see possible in Indiana are actually seen in Australia.