Democrats on appropriations peg Camelot lottery share at up to $3B
Democrats on the state House appropriations committee have put forth an estimate of between $1 billion and $3 billion for what a private firm could make through a contract as manager of the Pennsylvania Lottery, according to a talking points sheet on their website.
The estimate is based on the bid from Camelot Global Services PA LLC and some other details shared so far in the process by Gov. Tom Corbett’s administration, spokesman Barry Ciccocioppo said.
The same went for the Democrats’ estimate for how much Chicago-based financial adviser Greenhill & Co. Inc. could get from a deal being signed: between $30 million and $50 million.
It has taken “quite a bit of calculating” considering the administration had not been forthcoming with its own such estimates, he said.
The state Department of Revenue has responded to the document by saying it is full of misinformation, including the Greenhill estimate, spokeswoman Elizabeth Brassell said.
From the $50 million in bid security that Camelot has put up, compensation for the multiple consultants on the deal would be capped at $30 million, so there is no way that one of them alone could get a full $30 million or more, she said.
There also is no way to estimate what Camelot could keep because it’s not possible to truly project whether or by how much the firm would exceed its profit commitments, Brassell said.
The administration has posted a formula for a percentage of profits a private manager would retain if and when it beats its annual profit commitment: 25 percent of the first 1 percent above the commitment and 50 percent of an amount that goes passed that threshold.
Federal law caps incentive compensation at 5 percent of lottery profit, according to the outline.
Many have been critical of what they see as the governor’s lack of transparency and also the speed of the process, considering that officials and lawmakers still have voiced outstanding questions.
The bid on the table from Camelot is valid until Dec. 31, the administration said last month. If accepted and an agreement is reached, Camelot would assume management functions for the lottery as a way to try to bolster revenue growth.
The lottery benefits programs for older Pennsylvanians and, by possibly entering into such an agreement, the administration aims to keep revenue generation up with a growing population of seniors.