Bet On Outsourcing Government

Lottery Privatization is Exactly What the Doctor Ordered

By Scott Alexander | The Save Jersey Blog

State House TrentonI like efficiently run smaller government. I also like the idea of providing value added services to citizens. Over time as services have been added to the menu, most governments look to themselves to provide services. Why? At the same time if there is an opportunity to outsource government operations to realize financial benefit, why not?

Governor Christie’s vision with outsourcing services currently provide by the State is the right vision. He should be turning over every rock to see where economies can be realized.

Outsourcing the lottery business, for example,is an idea ripe for the picking. There are private companies who do this already and it has been done in other U.S. states. The Northstar Lottery Group says they will more aggressively market the lottery programs and build online lottery sales. We are a gambling state so making lottery sales available through the internet will no doubt increase ticket sales.

The lottery grossed $2.8 billion last year with 30% or $950 million going towards public schools and state institutions. It grew last at 4.5%, but according to the treasury department would bring in between $1.42 billion and $6.88 billion more than the State expects to bring in over the next 15 years on its own. This is an additional $426 million to $2 billion in revenue to the State. I haven’t seen the contract but I assume there is a provision for payment to NJ if certain performance metrics are not met.

There is also an upfront $120 million payment which would help the Governor’s proposed tax cut. In addition, the State will cut salaries, health benefit expenses and pension expenses to employees no longer needed. All this comes at a price tag of $0 to tax payers.

On the other hand, the state could hire marketing experts and funnel additional dollars into the lottery and see how it goes. I don’t think the state can pay the salaries needed to hire someone qualified to aggressively market a $2.8 billion business to realize what the Northstar Lottery Group says it will achieve. The State would also have to redirect funding into a marketing budget away from other needs.

Turning this into a political issue in Trenton is just politics at its worst. The Governor is responsible for operations and the legislators are responsible for legislation. The Governor is completely in his powers to figure out ways to enhance operations, cut expenses and raise revenues, and he is doing just that.

I have heard this tune before; the Governor finds and implements something innovative, legislators cry foul because it will be another feather in the Governor’s cap, Governor implements an innovative idea and the public likes it.

Scott Alexander
About Scott Alexander 22 Articles
Scott Alexander is the former Republican mayor of the Camden County municipality of Haddon Heights.

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