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Hoosier Lottery delays vote on outsourcing

INDIANAPOLIS – The State Lottery Commission on Wednesday postponed a decision on whether to outsource more of its functions to leverage increased profits.

A recommendation – and vote – instead will occur next week while more analysis is done on the two bids received.

Lottery Executive Director Karl Browning said there are three choices – keep management and operations the same or pick one of the two private entities to take over new functions.

“We do not have to do a bad deal,” he said.

When pushed by reporters for more information about what bidders were promising the state, he would only say, “Stay tuned.”

Indiana’s bidding process began in July for a 15-year contract on marketing, sales and distribution services. Officials received 10 informal responses but only two final bids. If a bidder is chosen, the contract should be completed by Nov. 1.

Hoosier Lottery officials have asked bidders to pledge how much income they could return to the state under the current system of games, as well as an enhanced bid with expanded lottery games, platforms and delivery mechanisms.

Browning said if a private operator brings in money above that threshold, they get a bonus; if the dollars are below the threshold, they pay the state the difference.

Currently the lottery is run by a five-member board appointed by Gov. Mitch Daniels. The board will still own and control the lottery.

Any profits from the lottery after expenses are returned to the state general fund to pay for excise-tax cuts and pension obligations.

Lottery income usually hovers around $200 million annually, dropping to $178 million in 2009. The latest fiscal year ended in June, with income of $227 million distributed to state coffers.

Browning told commission that an analysis of similar states showed Indiana could expect a potential income growth of 40 percent to 60 percent.