HARRISBURG — Pennsylvania Attorney General Kathleen Kane said today that she has rejected a contract sought by Gov. Tom Corbett that would let a British firm manage the $3.5 billion Pennsylvania Lottery, saying it contravenes the state constitution.
Her decision came after Corbett undertook a nine-month process to hire a private company to replace state employees atop one of the nation’s largest lotteries.
Corbett can challenge Kane’s decision in court.
The rejection is likely to add animosity to the relationship between Corbett, a Republican, and Kane, a Democrat who has been in office four weeks. Kane ran on a pledge last year to be independent of Corbett and investigate how the attorney general’s under Corbett in 2009-10 handled the molestation investigation into former Penn State assistant coach Jerry Sandusky.
Corbett has said he believes Camelot Global Services can produce higher and more stable lottery profits as the state tries to keep pace with rising demand for programs for the elderly that the lottery funds.
Democratic lawmakers have criticized Corbett as simply diverting money from programs for the elderly to a foreign firm at a time when the state employees who run the lottery are achieving strong gains in profits and sales and keeping overhead low.
The attorney general’s office reviews state contracts for form and legality.
Corbett’s agreement with Camelot was for 20 years. Camelot guaranteed at least $34 billion in profit to the state over that time.
It was allowed to charge a management fee worth hundreds of millions of dollars over the life of the deal and receive cash incentives for exceeding its annual profit commitments.