Treasurer McCord disputes legality of lottery expansion

HARRISBURG, Pennsylvania -- (PRESS RELEASE) -- Lacking a precise description of the types of gaming to be deployed on video lottery terminals, it is currently impossible to determine whether such an expansion of the lottery under a private management agreement would be lawful, State Treasurer Rob McCord said today.

McCord wrote to Secretary of Revenue Daniel Meuser, responding to a December 28 letter in which the secretary contended that the state lottery law already gives his agency the right to introduce video gaming devices to Pennsylvania.

McCord pointed out, however, that Secretary Meuser's letter stopped short of providing a clear description of the monitor or terminal games being planned. The Corbett administration is considering a contract to turn management of the state lottery over to a private company, the British firm Camelot Gaming. Camelot in turn has promised to increase lottery proceeds, based largely on an expansion into new types of games that McCord believes might require legislative authorization.

"In fact, there is substantial doubt the use or operation of 'monitor-based games' and 'Internet gaming,' as identified in your letter, are authorized by state law," McCord wrote.

The Treasurer went on to note that some such devices could match the definition of a slot machine under the 2004 law that legalized casinos in Pennsylvania, and would thus fall under oversight of the Gaming Control Board. He also pointed out that although some video lottery terminal games may operate on the same premise of random number generation as scratch-off lottery tickets, they eliminate the use of a physical ticket and bypass a person who must activate the wager and/or deliver the payout. Those differences alter the nature of the lottery gaming experience and allow for much greater frequency of play in a manner that could constitute a substantial expansion of gaming beyond the limits of existing law.

"I acknowledge it may be worthwhile to consider transforming the Commonwealth's existing retail lottery ticket sales system to one of centrally controlled slot machines / VLTs in an effort to increase revenue. I suggest, however, such a significant expansion of gambling is more appropriately considered by the General Assembly, not a state agency's public procurement contracting process," McCord wrote.

He cautioned that he would reserve judgment on disbursing money to a private lottery manager until he is certain that the lottery expansion does not go beyond existing law. As Treasurer, McCord has a statutory responsibility to ensure that all payments of public funds from the state treasury are lawful.