Hoosier Lottery privatizes mangement to increase revenue

The Hoosier Lottery announced Wednesday it will outsource management of its services to GTECH Corporation to boost revenue by a projected $2.1 billion during the next 15 years.

The privatization will consist of outsourcing its marketing, sales and distribution, thus increasing contracted services from 88 to 95 percent, according to a press
release.

“As an agency operating within the structure of state government, it is impossible to maintain the continuity of management and continuity of strategy that is needed to maximize the potential value of the lottery operation,” said Al Larsen, Hoosier Lottery public relations manager.

The Indiana State Lottery Commission approved the contract with GTECH, a leading global gaming technology and services company based in Providence, R.I.

The commission was faced with deciding between GTECH and New York-based corporation Scientific Games. GTECH provided the highest bid of projected revenue and the most detailed business plan, the commission determined, according to the
release.

Hoosier Lottery proceeds benefit pension funds for retired teachers as well as pension and disability funds for retired police officers and firefighters, Larsen said.

“Every extra dollar that is generated is one more dollar for the state’s general fund,” Hoosier Lottery Executive Director Karl Browning said in the release.

The lottery funds represent a small percentage of pension funds for retired firefighters in Bloomington, said Robert Loviscek, president of the Bloomington Local 586 Union of Professional Firefighters.

With current funds, 93 percent of Bloomington firefighters will be able to retire with pension, Loviscek said.

“We are hoping our actuaries will be well over 100 percent again,” he said.

Teacher pension actuaries are currently at lower levels than the firefighter pensions, Loviscek said.

Jeff Hutson, chief communication officer for the Indiana Public Retirement System, said the decision will not influence how much is directed toward pensions.

“Thirty million dollars per year goes into the Pension Stabilization Fund of the Indiana State Teachers’ Retirement Fund,” Hutson said.

An additional $30 million will benefit the police officers’ and firefighters’ pension and disability funds.

Indiana is the second state in the nation to outsource management of its lottery.

In Indiana, the state will compensate GTECH through both a management fee and a bonus for exceeding projected income, Larsen said.

“GTECH can also be penalized by the lottery if they fail to reach the level of income they committed to provide us,” Larsen said.

The lottery commission aimed to learn from Illinois to maximize their outcome.

“We studied the Illinois process and their results, and looked at the strengths and weaknesses of their program, but didn’t limit our research to that,” Larsen said.

Gov. Mitch Daniels said in a press release Wednesday that this decision might have been the most obvious the state has had to make during the last eight years.  

“Our lottery revenues lag far behind most states. ... This step will make the nation’s most solid state fiscal position that much stronger,” Daniels said.