The state of Illinois yesterday took the first steps in selling its state lottery system, hoping to attract as much as $10 billion from investors who, in return, would own a monopoly that could turn out to be the biggest jackpot yet.
The sale, which may occur as early as the spring, would not be the first privatization of public property — both Chicago and Indiana have recently earned billions of dollars by signing long-term leases with private companies to run toll roads. But the proposed lottery sale is almost certain be one of the largest privatizations of a state-run program, and it raises concerns that states, some of them critically short of cash, are selling valuable assets that could otherwise provide consistent streams of revenue.
Under the proposed sale, Illinois would receive a multibillion-dollar one-time payment, and the lottery’s new owners would receive all revenue and profit for 75 years.
Indiana is also considering selling its lottery, and bids are due later this month. That sale is expected to raise more than $1 billion upfront and annual payments of $200 million. Midway Airport in Chicago, toll roads in Pennsylvania and the New Jersey Turnpike are all potentially on the block.
Gee, what on earth could be driving this trend?
“These are very healthy businesses,” said Melissa Kearney, an assistant professor of economics at the University of Maryland. “It’s unclear exactly what is gained by selling a lottery, except for a huge pot of money that legislators can start spending right away.”
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