The Deyoe Dispatch

By State Representative Dave Deyoe

January 26, 2009

This past weekend the Governor’s office stated that they would not include a proposal to sell or lease the lottery in the Governor’s budget proposal this week. The statement did not rule out the possibility of this coming up later in the session, however, and the leadership in the House and Senate continue to talk about it as an option. This leads me to believe that this issue is still alive.

One lottery proposal allows for a 49 year lease with the state receiving 100 to 200 million dollars up front and then 22% of proceeds each year after.  This is similar to the 22% charged to the gaming industry.

With as many as nine states currently considering or have considered proposals in the past to lease their state lottery but none actually doing it, questions have come up regarding legal restrictions under federal law.  Last fall the Principal Deputy Assistant Attorney General Steven Bradbury provided a response to a request by the criminal justice department regarding the legality of the leasing of state lotteries in general. While the opinion does allow for the leasing of state lotteries, it does put in place several limitations.

Some of the highlights of the opinion include:

-       The State may enter into contracts with private firms to provide goods and services, including management services, necessary to the lottery.

-       The State must exercise actual control over all significant business decisions of the lottery.

-       The State must retain all but a de minimis share of the equity interest in profits and losses of the business,

-       The State shall retain control to the rights to the trademarks and other unique intellectual property or essential assets of the State’s lottery.

-       The state must continue to make decisions about all aspects of the functioning business enterprise.

The Iowa Attorney general’s office has informed members of the House that they don’t believe the current proposals to lease the Iowa Lottery meet the limitations of the current opinion.

Individuals that support the potential lease of the lottery point out that the opinion does not eliminate the possibility of leasing the lottery.  They also say they believe there are severe flaws in the opinion and that it will be rewritten once the new administration is in place.

If you have any questions or concerns, please contact me.

Home phone:   515-382-2352

E-mail: Dave.Deyoe@legis.state.ia.us

To opt out of this list, please send an email to LISTSERV@LISTSERV.LEGIS.STATE.IA.US with the following in the BODY of the mail: "SIGNOFF REPRESENTATIVE_DEYOE"