Why privatize the New Jersey Lottery?

This is commentary from political blogger and cartoonist Rob Tornoe.

By all accounts, the New Jersey Lottery is enormously successful. Last year, it brought in $2.7 billion, a record and a 4.5 percent increase over last year. According to the Press of Atlantic City, it’s administrative costs amount to less than 1 percent of revenue, making it the most profitable state lottery in the country.  All told, the lottery provided the state with $950 million in direct revenue.

So why does Chris Christie want to privatize it?

As far as deals go, this one stinks. First of all, it’s a 15-year contract – a long time to be in bed with a partner you’ve just met. Second, only one company bid for the contract – GTECH, a controversial Italian firm that has already been involved in one kickback scheme in New Jersey, and is dealing with a lawsuit in Illinois after taking over their lottery. 

As Communications Workers of America spokesman Seth Hahn put it, “I wouldn’t sell a rusty-old minivan without taking a few bids on it.” Yes, this deal sounds like a winner. Maybe that’s why the administration released the news at 4 p.m. on a Friday, when no one was paying attention.

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Unfortunately, Christie doesn’t even need the Legislature’s approval to force through the privatization deal. A bill that would require legislative approval of any such privatization deal sits on Christie’s desk, collecting dust. Assuming U.S. Attorney General Eric Holder doesn’t strike down the plan, Northstar New Jersey (part of the GTECH consortium) will take over at the snap of a finger, with only our trust in Christie to placate us.

Can anyone say Ashbritt?

Back to my original question – if the state lottery is so successful, why privatize it in the first place?

There are several answers to that question. The first one is macro – Republicans have convinced themselves that all government is corrupt and inefficient, and think privatization is the solution for everything. They never seem stop and notice that programs like Medicare, Social Security and the VA function with much lower administrative costs than their private-sector counterparts. Even more galling, Republicans are more inclined to defend military spending, the most bloated and wasteful aspect of our government’s budget.

The second, and most important, is looking at it from a local perspective. Next year, Christie’s budget faces a $637 million shortfall. It just so happens this privatization deal comes complete with a giant carrot, in the form of a $120 million upfront payment. He slams Jon “I lost $2 billion” Corzine’s budget gimmicks, yet Christie has shown he’s no different when it comes to creative, one-shot sources of revenue.

So by privatizing a highly successful state lottery, Christie can plug his budget hole and get rid of more state workers and shore up his conservative street cred as he seeks GOP support for a possible Presidential run. He’s already sold off state’s public TV station, and has even floated the idea of privatizing state parks and historic sites (which wouldn’t have been necessary if Christie hadn’t diverted millions from the Department of Environmental Protection’s funds into the general budget). 

I guess the real question is this: How many of the state’s assets will Christie need to sell off to make Republicans forget about his bromance with President Obama?


Rob Tornoe is a political cartoonist and a WHYY contributor. See more of his work at RobTornoe.com, and follow him on twitter @RobTornoe.

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