Skip to content

Privatizing the Illinois Lottery

January 24, 2007
There is a discussion at the U of C Law School Faculty Blog about regrets about privatizing the Illinois lottery. Although nominally about opposition to the "sale" of the Illinois lottery, the posts more of a dislike of state sponsored lotteries (which I share), than opposition to the privatization of Illinois’ lottery.
Saul Levmore writes:
I have, therefore, a different objection to the proposed sale of the Illinois lottery. It carries over to other privatizations. It is that most contracts to sell an asset claimed by the government will need to come with conditions or promises that the government will not devalue the asset is sells. Illinois knows that its lottery will yield more upfront cash if it promises – and can be counted on to keep these promises for reputational or legal reasons – not to make the (private) lottery illegal after the sale. But this means that a sale of the lottery limits the ability of future, elected governments to do away with the lottery. The objection, then, is that revenue maximizing privatization locks in policies more than might be optimal.
I don’t really understand why this objection isn’t applicable to any commitment. By making the commitment one gives up potentially effecient changes in policy later.
In any event, the sale doesn’t necessarily requireme such a commitment as there could be terms of the sale that specified remedies in the event the state government changed its mind about what the proper role for lotteries in Illinois should be. This would incentives not to trigger those remedies, but those incentives aren’t that much different than the incentive to keep a state run lottery around because of all the money it brings in every year.
Perhaps I’m missing something.

From → Economics

Leave a Comment

Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: