Kane Says Lottery Contract Illegal

AG Kane

Attorney General Kathleen Kane announced today that she has rejected the contract between the State of Pennsylvania and Camelot Global Services PA LLC on the basis that the agreement constitutes an “unlawful extension of executive authority.”

Kane said that the contract infringes on the power of the General Assembly to make basic policy decisions.  It would establish a 20 year management agreement to oversee the Pa. lottery and was expected to bring in more than $34 billion in profits.

In addition to Kane’s disapproval of the contract as a whole, specific components are also under scrutiny, such as the provision for compensation of indirect expenses by Camelot, which is not permissible under the state constitution.  A portion of the expected $34 billion consists of expected profits from monitor-based games, the development of which is not authorized by current state law.

Governor Tom Corbett, whose proposed budget for the upcoming fiscal year relies heavily on the agreement to generate an additional $50 million in funding for senior citizens.  The governor issued a statement this afternoon regarding Kane’s decision.

“I’m deeply disappointed. I don’t agree with the attorney general’s analysis and decision, and we will review our legal options.”

The attorney general’s decision can be challenged in Commonwealth Court, an option the governor will likely explore.

“My job is to protect Pennsylvania’s seniors, and we will continue to do that” he said, “We have a growing population where one in four Pennsylvanians will be over the age of 65 by 2017. My goal is to ensure that funding for senior programs keeps pace with that growth.”

Update: Pa. house democrats took issue with the governor’s figures regarding the state’s senior citizen population.

Kane, whose decision was met with applause from many Democrats in the legislature anticipated such a response from the governor saying,

“Be wary of information by politicians that attempts to blame the lawyers who reviewed the contract for the loss of any monies to seniors, it is disingenuous to put the cart before the horse by promising money to people in need, based upon a contract, before making sure that that contract was legal, and then blaming the messenger when it is deemed illegal,”

Camelot Global Services also released a statement today following the Attorney General’s decision.

“We are disappointed with Attorney General Kane’s decision to reject the private management contract. We guarantee our proposal will produce unprecedented profits for senior programs and we have backed our investment in Pennsylvania with $200 million – transferring all risk from state taxpayers. Camelot has indicated it would headquarter in Pennsylvania, pay all taxes required of any commonwealth business, and keep all lottery jobs in the state. We have also publicly stated we would not oppose union organization by our employees. We have no further comment at this time.”

February 14th, 2013 | Posted in Front Page Stories, Governor, Harrisburg, Top Stories | 30 Comments

30 thoughts on “Kane Says Lottery Contract Illegal”

  1. Mark says:

    I’m not sure what the real truth is about the legality of this bid. But Pennsylvanians may wish to reconsider any support for a Camelot bid either way – given the profiteering bunch are just about to double the ticket price of the UK’s most popular lottery game. The Brits are not happy, but Camelot are just pretending nothing is wrong!

  2. mak says:

    Given that Corbett just pushed hundreds of thousands of the seniors who would have benefited from (100% federally funded) expansion of Medicaid over the cliff (and out of their long-term care facilities), it’s difficult to take his professed concern for seniors seriously. More likely, as with the Marcellus Shale gas giveaway, either Corbett’s family members would personally benefit from the privatization of publicly owned property, or he himself is planning a cushy post-governor’s consulting post with an affiliated outfit.

  3. LycoGirl says:

    Sass,
    Are you saying Jocelyn Grecco is who she states she is? I she a “conservative leader?” I read through some of her posts and was convinced they were satire.

  4. Steelblitz1 says:

    @ Sass…

    Your last 3 letters fit you right. Show some decency. Its not that hard.

  5. Sass says:

    @ Ms. Greco / Black Widow – I had the misfortune of volunteering with her. Not only is she batty but she crossed a bright line with her sweet-talk to married men.

  6. Basile says:

    Attorney General Kane’s Sandusky deputy seen as fair, balanced

    http://www.pennlive.com/midstate/index.ssf/2013/02/attorney_general_kanes_sandusk.html

  7. Thomas in PA says:

    Crackpot Kane, at it again. What’s going on with the Sandusky investigation, Kathleen? That was such a HUUUUGE issue during the election and you vowed to immediately get to the bottom of it…so, what’s going on? Where’s the investigation? Yeah, another lying liberal who uses tragedy to gain in the polls. No different than Obama and Newtown with his gun ban. Disgusting lowlifes, every single one of them.

  8. Jim says:

    @Bob Howard: The problem here is that Corbett’s behavior was, as it always is, typical Republican thuggery. He wanted something, so he decided to do it, regardless of whether it is legal or not.
    He knew he could not get this deal through the legislature and, beyond that, believed he could sign off on aspects of a deal that were blatantly illegal. The issue is NOT whether or not this is a good deal in the long run for the state. The issue is whether the deal was legal at all.
    I was a skeptic when it came to Ms. Kane as Attorney General, however it is clear that with her in charge of the AG’s office that the rule of law trumps all.

  9. LycoGirl says:

    @Jocelyn Grecco, I’m really enjoying your posts.

  10. Brrrrdat says:

    Gus the groundhog, one of the worst marketing ideas in history, basically just owned everyone in this comments section

  11. Gus the Groundhog says:

    That’s correct re: Mr. Mulle. The same Mr. Mulle who in very recent years has signed 3 different “Lottery” contracts with 2 vendors for marketing and operations. The total payments for services for those 3 contracts….about HALF of a BILLION dollars. It’s sad how little REAL information most people have in forming their views about this proposal and how they choose to ignore basic facts.

  12. bobguzzardi says:

    The memo was prepared by Robert Mulle, Esq who appears to be a career attorney with AG office and does not seem political.

  13. TR says:

    she refused to take questions about her $30,000 contribution from the lottery union….why is it no one wants to ask her the tough questions?

  14. TR says:

    Oh i’m sure the $30,000 contribution from the Lottery Union had nothing to do with this decision…..oh wait…it definitely did.

  15. Jocelyn Grecco says:

    As a conservative leader I am outraged at Kane’s actions and it is not because Freedom Works and Heritage Foundation are funding Bob Howard and the Governors liquor privatization effort. Citizens deserve the right to buy alcohol from the private sector and not Big Brother in Harrisburg. It’s about CAPITOLISM, Ms Kane. I strongly encourage the new AG to go after the millions of illegal aliens in PA and not the illegal liquor contract.

  16. SEAN says:

    OLD, ANGRY, REPUBLIKKKAN WHITE MEN CAN NOT STAND A CAPABLE AND ASSERTIVE WOMAN IN POWER. DEAL WITH IT FELLAS.

  17. David Diano says:

    Gus (least favorite groundhog in PA)-

    It’s one thing to have the state agency that runs the game to add games to the lottery. It is completely different to sell the system to an outside company (particularly one that isn’t based in PA or the US).

    If they hired Camelot (for a few thousand dollars worth of consulting) to come up with some new games, that wouldn’t be a problem. If they hired Camelot to come in, evaluate the current management and suggest organizational or efficiency improvements, that would have been okay as well.

    pm-
    I briefly read McCord’s argument against the change. My layman’s understanding was that Camelot’s contract opened the doors to types of games that either were not among the games the legislature had permitted, or games that would have conflicted with the casinos. Therefore, the contract, if entered into, would have exceeded the authority the legislature established regarding the types of games the lottery and casinos could have.

    The previous AG was just a lackey of Corbett, so I hope Kane will continue to stand up for the law over Corbett’s attempts to circumvent it.

  18. Sue M. says:

    @Bob Howard is a phony. He could care less about the lottery sale benefitting older Pennsylvanians. Bob doesn’t care that gambling is the devil on earth – destroying the families and our communities. Bob only cares about his paycheck from Freedom Works. Bob sold his values to foreign corporate interests. And bob, governor might be the only office left that you haven’t run for. How many times do you have to lose before you realize the voters don’t like you?

  19. John says:

    @DD

    Pennsylvania is the #2 retirement state behind Florida.

    We all know figures can be used and interpreted many ways, depending on the intent of the person using and interpreting them.

  20. Gus the Groundhog says:

    @ david

    The legislature delegated such power to the Department of Revenue/Department of Revenue and that is an agency under the Governor. As to the illegality re: expansion of gaming – please explain that rationale. Review ALL of the existing lottery games being played today, 2 years ago, or even 5 years ago – drawing games, multi-state games, instant games – please identify one that was enacted OR approved by the legislature. Under the AG’s rationale, she just declared ALL terminal based PA Lottery games illegal.

  21. David Diano says:

    Corbett is full of sh*t about 25% of population being over over 65 in 2017

    The only way you get even close to that number is if NO ONE over 60 dies in the next 5 years (or moves out of the state), and no one is born in the state, and no one younger than 60 moves into the state.

    What the Kane critics (or Corbett supporters) fail to realize is that the problem is that Corbett tried doing this without going through legislature and proper review.

    The illegality is two-fold:
    1) The Governor doesn’t have the authority to make the deal
    2) The deal itself contained provisions that violated existing PA law.

    There could be a 3rd-fold if Corbett used this deal to enrich himself or his donors through kickbacks or other benefits off the books or behind the scenes.

    When this kind of money is involved and a deal is rammed through without public scrutiny it is rarer than unicorns for it to be legit.

  22. Casey says:

    It’s like a Valentine for the people! Thanks Kathleen! :)

    As for the political side of it, the lottery isn’t broke. It need not be privatized. It’s solvent, profitable for the state, and benefits older Pennsylvanians without a private entity taking a cut from it. Maybe One-Term-Tommy will finally leave it alone.

  23. Gus the Groundhog says:

    Regarding the rationale that this is an expansion of gaming, could any of the readers or commentators be so kind as to please review the list of ALL lottery games on the Pennsylvania Lottery’s website and simply indicate here which ones were enacted,approved or authorized by the Pennsylvania General Assembly?

  24. Basile says:

    “it is disingenuous to put the cart before the horse by promising money to people in need, based upon a contract, before making sure that that contract was legal, and then blaming the messenger when it is deemed illegal,”-Attorney General Kane

    This seems the pattern for our Dicktator.
    It is about time someone holds him accountable for being the corporate ditch he’s been.

  25. Rob says:

    @Bobby,

    Your disagreement with the outcome of Attorney General Kane’s legal decision based on your support for Governor Corbett’s policy position means she “politicized” her job? It isn’t possible two different people have two different legal opinions. Wow, what have you been taught, son?

    I hope you don’t have a job or face any life situations requiring an understanding of nuance.

  26. Rob says:

    @Bob Howard,

    Thank you for demonstrating you are either naive or a fool. Attorney General Kane was charged with reviewing the contract for legality (required under Pennsylvania law, whether you like it or not) rather than policy. Because you disagree with the legal analysis rendered by her office comprised of hundreds of experienced attorneys (most of whom are non-political and have served only Republican Attorneys General), she is being political and her analysis is incorrect based on your policy ideology? What are your legal bona fides? As to whether it is good policy is a different analysis, and you have no idea of Attorney General Kane’s opinion. Please learn the difference between policy and legality.

    The executives who run the Ontario Teachers Pension Plan (the owner of Camelot) are very savvy and never would have submitted their voluntary proposal if it was a bad deal for OTPP/Camelot. Whether the proposal is a good deal for Pennsylvania is a different analysis, and you have no idea of Attorney General Kane’s opinion. OTPP and Camelot are in business to make money, not to lose money. Perhaps you conduct your business affairs without care for making money, but I guarantee OTPP and Camelot do not (the executives would be violating their fiduciary duties).

    Before you attempt to wax authoritative about matter which you know not, please think again.

  27. Bobby says:

    I didn’t think Kane would politicize the AG’s office. Guess I was wrong.

  28. PETE C says:

    If the proposed contract is illegal then it should not be entered into.The AG is simply doing her job.If someone disagrees with the opinion of the public offical designated to render that opinion then they have recourse in the Courts rather than to make comments challanging that decision.Simply put those comments are not worth the media on which they are written.

  29. Brad Kirsch says:

    The unilateral actions of the Governor of PA are to blame for any delay in this contract.
    The Attorney General and the Treasurer of the Commonwealth have both weighed in on this matter and the Governor is free to take any action he wishes to take.
    It is also evident that the expansion of gambling in PA is also up to the Legislature to engage in as a matter of oversight and good government and that the Governors singular actions are the fault in this process.

    Governor Corbett has deemed himself to not only be a Governor but a dictator of all that is good or bad in PA absent our elected Legislature that we the people also elect to see to business.

    The processes of the lottery guaranteed to the Senior Populations by the actions of not only past governors but our legislative branch must be diligently reviewed by all concerned and the negotiations by one man do not make for sound governmental processes.

  30. Bob Howard says:

    Ms. Kane just cost seniors hundreds of millions of dollars. Let’s hope they ask her why? Is it to protect the casino operators or is it to destroy the Republican Party or is it because she likes to exploit senior citizens with other people’s money? As for Camelot they are probably relieved to get out of the deal that promised all this money to Pennsylvania seniors. Please note that Ms. Kane stated you should be “wary” of people like me. Be wary all you want I am not planning to run for governor (as she likely will) nor do I even approve of the Commonwealth being in the gambling business, including lottery or casino. When the political class tells me to be wary of others, it is time to look behind the curtain. Think of how well this works out for all those politicians in the legislature seeking political contributions. So decide whom you should be more wary of.

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