Privatizing state lottery a winning idea

Colorado Springs Gazette Editorial

4/19/07

      We’re cheered whenever Republicans and Democrats come together in support of any idea that actually might shrink government. It’s a rare occurrence, to be sure, but not unheard of. So we see promise in a bipartisan push in the state Capitol to sell the Colorado Lottery and use the proceeds on a wide-range of budgetary basics.

      There was a time when only racketeers ran numbers on the streets, usually preying upon the high hopes of poor people. That was, and still is, illegal. Then, government itself muscled in on the action — on the premise, of course, that this was for the common good. More than 20 years ago, Colorado’s government joined the fray and eventually wound up spending most of its lottery proceeds on acquiring trails, parks and open space.

      Whether that is the best use of those proceeds, and whether government should be in the gambling business in the first place, are debates for another day. We long have had reservations on both questions, but the proposals pending in Denver this week could make these issues moot.

      State Sens. Josh Penry, R-Fruita, and Chris Romer, D-Denver, want to “securitize” — or sell private investors an interest in — the state lottery. It's a transaction projected to net between $2.2 billion and $2.6 billion (numbers that are somewhat speculative, based on appraisals of the Illinois state lottery, which also might be sold). But the proceeds would be significant, and beneficial, if put to good use.

      Penry and Romer want to place much of the proceeds in a trust and use the interest income to continue funding open space and parks, while also plowing some of the sale proceeds into scholarships for higher education. At least one House Democrat, Buffie McFadyen of Pueblo West, likes the idea, too.

      Meanwhile, the state Senate’s Republican leadership, including Minority Leader Andy McElhany of Colorado Springs, is proposing a variation on the theme. They want to securitize and then use some of the proceeds on K-12 education. The Republican plan is seen by some as an end-run on Democratic Gov. Bill Ritter’s proposal to hike property taxes on most Colorado homes and businesses to fund schools, which all but one Statehouse Republican call a tax increase. But the idea deserves to be weighed on the merits; selling the lottery strikes us as a plausible option.

      We like the idea for a more fundamental reason: The state never should have gotten into the numbers-running business in the first place. We’ve heard it a thousand times — the rhetoric about the lottery being the golden goose that raises revenue without raising taxes. But we’ve long held that the state has no more business raising funds through a lottery business than it does through an amusement park, a dog track, a restaurant or any other entertainment enterprise. These activities are better left to the private sector.

      Now there's a good reason to unload the lottery. And if we get out now, taxpayers can walk away with a sizable chunk of change. Assuming the windfall is put to a wise use — always an iffy assumption, of course — selling the lottery seems like a winning ticket to us.