Improve State Lotteries by Privatizing Them

Increase revenue and avoid tax increases.

As states continue to grapple with ongoing fiscal pressures, some are beginning to explore an innovative new lottery privatization model with the hopes of increasing revenue. To the extent that this trend could prevent tax hikes or cuts in core programs, it is worth applauding.

Earlier this month, New Jersey began seeking bidders for a lottery management contract that could generate $120 million in upfront revenues and higher net annual revenues to the state. Indiana and Pennsylvania have likewise launched similar efforts in recent months.

The pioneer driving this trend is Illinois. It handed over its lottery operations to Northstar Lottery Group, a private manager, last year. The result? A $36 million boost in net lottery revenues to the state in the first year with hundreds of millions of additional dollars expected over the next five years.