Pennsylvania's new attorney general said this afternoon that, after a monthlong review, she has determined that Gov. Tom Corbett cannot decide to have a private company run the state's lottery.
The authority to privatize the lottery resides with the state legislature, not the governor's administration, Kathleen Kane said.
She stressed that she reviewed only the constitutionality of the contract, not the validity or business wisdom of it.
Corbett responded later in the day by saying said his administration will "review our legal options."
Corbett and the company he wanted to run the lottery, Camelot Global Services PA LLC, both have expressed their disappointment with the decision in separate statements.
"I don't agree with the attorney general's analysis and decision …," Corbett is quoted as saying in the release from his office.
The deal, which Corbett's administration signed off on nearly a month ago, was before Kane for review with a 30-day deadline approaching.
Corbett has pursued the controversial idea of turning management of the lottery, with proceeds benefitting older Pennsylvanians, over to a private manager for better part of a year.
Lottery profits of about $1 billion annually support a host of senior programs in the commonwealth.
But the number of older Pennsylvanians is growing and the administration has argued the private sector might be the best option to keep up with the increasing need for funding in the coming years.
The state announced in November it had a sole bid on the table from Camelot following months of deliberations, which upset lawmakers and officials who felt the process has lacked transparency.
A contract with Camelot offers an additional $3 billion to $4.5 billion for senior programs over 20 years, the governor's office said last month when it announced it would move forward with the deal.
The decision comes on the heels of House Democrats announcing their plan for an additional $120 million for senior programs in the next state fiscal year – without the need for privatizing lottery management.
The lottery, as it is now, has a projected $187 million surplus, according to a news release Tuesday.
The Democrats' plan would maintain a "sizeable surplus" for the lottery and keep $50 million in the Lottery Fund's reserve, the release stated.
It shows money for senior programs can increase without the need to privatize lottery management, according to the release.
In a statement attributed to state House Democratic Leader Frank Dermody, Corbett has been "wrongly holding programs that benefit older Pennsylvanians hostage."