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February 5th, 2009

Leasing Iowa Lottery is still an option

A possible lease of the Iowa Lottery to private investors remains alive in the Iowa Legislature, despite Gov. Chet Culver’s efforts to quash debate on the issue, key lawmakers said Wednesday.

Iowa House Speaker Patrick Murphy and Senate Majority Leader Michael Gronstal, both Democrats, told The Des Moines Register that leasing the state-run lottery is still an option to address Iowa’s budget crisis.

The lottery was created in 1985 and has generated $1 billion in profits for state government programs.

A leasing deal could provide a major shot of cash to the state’s ailing budget. But a lease also would mean annual profits would go to private investors rather than the state treasury.

If approved, Iowa would be the first state to have its lottery operated by a private company. Other states have looked at the idea, with some dropping it. An opinion in October by the U.S. Department of Justice says that states must retain actual control over all “significant business decisions made by” lottery officials.

Culver, a Democrat, began the public discussion of leasing the lottery by meeting with a group of potential investors late last year.

But Charles Krogmeier, Culver’s chief of staff, tried to end the talk last month, saying the issue was getting more attention from pundits and partisans than it deserved. “There is no plan to sell or lease the lottery. Period,” Krogmeier said then.

Murphy and Gronstal said Wednesday that the idea of leasing the lottery is not dead. They cited the enormity of the state’s budget shortfall, which exceeds $700 million by some estimates for the fiscal year starting July 1.

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The Iowa Republican

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