Indiana Governor Abandons Plan to Lease State Lottery

November 27, 2007

A number of state legislators and governors have recently considered selling or leasing their state-run lotteries for a quick influx of cash. One of the most publicized lottery “privatization” plans was crafted in Indiana, although it was never implemented. Now Governor Mitch Daniels has announced that he is abandoning this plan.

Form Lottery Post:

Indiana Governor Mitch Daniels said today he won’t make a renewed pitch in the upcoming legislative session for his proposal to privatize the Hoosier Lottery, saying lawmakers will be too busy considering property tax reforms.

During the last session, Daniels proposed leasing the lottery to a private operator and said one company was willing to pay $1 billion plus $200 million in annual payments for the 30-year lease.

The money it generated would have gone toward a life sciences fund and a scholarship program for college students who stay in-state after graduating.

A version of his plan passed the Republican-dominated Senate. But he withdrew the proposal days before the session ended in April after it stalled in the Democratic-controlled House.

If Daniels had originally proposed selling the lottery outright rather than leasing it, and thereby getting the state out of the lottery business entirely, we would be disappointed to see him drop this plan. However, since the plan was simply to lease the Hoosier Lottery, which would have kept the state in the lottery business—a business it should not be part of in the first place—dropping the plan is not such a bad idea.

State-run lotteries are a source of implicit tax revenue, and they are the epitome of poor tax policy: they are regressive, they lack transparency, they are not economically neutral, and they are often sold to voters with promises of significantly increased education funding—promises that are generally not kept.

If Indiana needs more revenue, it should look to explicit taxes, not to the state lottery.

Click here for more on state-run lotteries.


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