MuniLand

“Around the world, people are shifting their gambling from traditional slot machines and tables to online and mobile devices,”  David G. Schwartz, director of the Center for Gaming Research at the University of Nevada, Las Vegas. (via Philadelphia Inquirer)

States are battling to get control of gambling via the Internet. Nevada, which has the largest casino-based gambling business, passed legislation this week that allows it to grant licenses for online gambling and to enter multi-state pacts to extend the reach of its licensees. Meanwhile, New Jersey is queuing up legislation to jump into the online gambling race. Delaware was the first state to allow online gambling, but it has a more restrictive approach that requires that players reside in the state.

Online gaming is being built on a broad foundation of national gambling. The Rockefeller Institute laid it out in a 2010 report:

Currently, 43 states operate lotteries, 15 allow commercial casinos, 12 have racinos [a combined race track and casino], and over 40 states allow pari-mutuel wagering [a group bets against each other, rather than the house or race track]. Lotteries and casinos generate the bulk of gambling-related revenues. While traditional casinos experienced dramatic growth during the 1990s, much of that growth has shifted to racinos in recent years as more states have approved such facilities. Pari-mutuel betting, once the major source of gambling revenue for states, now represents less than 1 percent of the total.

Gambling revenues for states was about $24 billion in 2010, with lotteries earning about 73 percent of over-all proceeds. Casino revenues have been flat. A new luxury casino, Revel, declared bankruptcy this week after garnering minimal business in the saturated Atlantic City market.

In the media appearance above, Pennsylvania Attorney General Kathleen Kane announces that the contract drawn up by Governor Tom Corbett to privatize the state’s lottery management “contravenes the Pennsylvania Constitution and is not statutory authorized.” Translation: Pop- Bam- Take that, governor – You don’t have the power that you think you have.

This is one of democracy’s more glorious moments.

I wrote in early December around when Corbett’s deal to privatize the lottery became public:

There is a lot of darkness and a web of connections around the efforts to privatize the Pennsylvania state lottery. Tom Corbett, the governor of Pennsylvania, is attempting to force through the privatization before the legislature comes back into session in January and has a chance to review the terms of the 20-30 year deal. Democrats are howling.

David Fillman, with union of #PALottery workers, says public mgmt could be more lucrative than private. “And we don’t have a profit motive.’

— Marywilson (@Marywilson) January 14, 2013

A big brawl is going on in Pennsylvania over the way that Republican Governor Tom Corbett has been maneuvering to privatize the state’s successful public lottery. The governor held negotiations in secret for months before announcing in November, 2012 that he had chosen a single bidder, the UK’s Camelot Global Services, to be awarded a 20-25 year contract to operate the lottery.

This announcement, made while the Pennsylvania legislature was in recess, was intended to move the governor’s process to conclusion before the legislature came back into session. Public outrage caused Corbett to initially delay the contract, but in a move that seemed to show contempt for the state’s legislators, his office gave Camelot a “Notice of Award” late last Friday; just before the Senate Finance Committee was to hold a hearing on the details of the contract.

Nothing makes me happier than to see law as the weapon of choice in a fight between public officials. There is a big battle underway in the Commonwealth of Pennsylvania over the efforts of the governor to privatize the lottery, currently a big source of revenue for the state’s senior citizen programs. I wrote last week about Pennsylvania’s sweetheart lottery privatization deal:

There is a lot of darkness and a web of connections around the efforts to privatize the Pennsylvania state lottery. Tom Corbett, the governor of Pennsylvania, is attempting to force through the privatization before the legislature comes back into session in January and has a chance to review the terms of the 20-30 year deal. Democrats are howling.

One Democrat with a lot of legal authority is howling away, and he has essentially blocked the governor’s efforts to sell the highly profitable lottery to a British firm. The Patriot News writes:

There is a lot of darkness and a web of connections around the efforts to privatize the Pennsylvania state lottery. Tom Corbett, the governor of Pennsylvania, is attempting to force through the privatization before the legislature comes back into session in January and has a chance to review the terms of the 20-30 year deal. Democrats are howling.

The Patriot News tells one side of the story:

Calling the administration’s pursuit of this potential deal “too secretive,” House Democratic Leader Frank Dermody, D-Allegheny, urged Corbett to be more transparent about his plan for privatizing the lottery that he said would cost older Pennsylvanians hundreds of millions of dollars in lost funding for services over the life of the 20-year contract.

“Now, when there is no General Assembly in session, he is trying to hand-deliver a lucrative contract to the lone bidder with no hearings, no legislative approval and no public scrutiny. This whole thing stinks,” Dermody said.

Some odd employment data is coming out of Puerto Rico. Although the population of the island has increased (see chart above), labor participation and the number of people employed have declined steadily, as seen below.

Meanwhile the government reports that the unemployment rate keeps declining (see below). Is this because they are contracting the size of the labor pool, or are there really new jobs coming online?

A Spanish-language publication says that employment gains this year are coming from government hiring (Google Translation from Spanish):

Watch the latest video at video.foxbusiness.com
Peter Hayes of BlackRock gives a good overview of the current state of muniland (Hattip Learnbonds).

Good Links

NASBO: Pension accounting reforms regarding the use of discount rates

BlackRock: $55 billion – amount closed in budget gaps by 31 states for FY 2013

Manhattan Institute Public-sector unions’ money machine

LAT: Bankrupt cities? Don’t blame unions

Reuters: Economy, budget woes threaten non-profit hospitals – Moody’s

MTA: Budget remains balanced, but long-term challenges persist

City of Harrisburg: City completes and releases 2009 audit of city finances

Times-Tribune: Scranton Composite Pension Board tables city request for $16 million loan

Watch Texas Justice on PBS. See more from Need to Know.

There are surprises everywhere in muniland. Here is one I learned about from PBS: Despite leading the nation in executions, “Texas has been a pioneer in finding alternatives to prison – as a way to control costs and to prevent convicts from returning.”

Good Links

Atlantic Cities: The true cost of unwalkable streets

WaPo: “Taxmageddon” in one table

NYT: Where housing once boomed, recovery lags

Reason: Recovering America: earning less, spending more, $6.7 trillion poorer

WSJ: State-by-state unemployment rate from the Bureau of Labor Statistics

Reuters: Municipal bond sales up 68.3 percent, to $78.9 billion, in first quarter

Bond Buyer: Symposium on distressed municipalities

Bloomberg: Ohio governor fights own party over taxing Ohio’s drillers

Columbus Dispatch: Ohio proposes coordinated care for Medicare, Medicaid

Reuters: Fish tanks and palm trees – Miami’s new baseball stadium

The Civic Federation: Chicago plan lacks details on how individual projects will be funded

A woman wins a million dollars in the state lottery but still feels she’s justified to keep receiving food stamps. A local reporter tracks her down and confronts her. Although this discrepancy was extreme, I expect we will see government placing a higher burden of proof on welfare recipients to demonstrate need as state and local budgets tighten and the federal dollars that flow to them shrink. There will be less to go around, and the threshold for receiving welfare benefits will be higher.

Good Links

National Conference of State Legislatures: Percentages of women in state legislatures

American Public Radio: Washington state will limit emergency room Medicaid procedures

An excellent, short overview of the problems public pension funds face, by Carolyn Presutti of the VOA Special English Economics Report.

Good Links

The Economist: Some public pension fund wonkishness

Reuters: States ask Congress not to impose any new unfunded mandates

Kaiser Family Foundation: Tracking states’ implementation of health insurance exchanges

U.S. Census Bureau: What states earned from lotteries and gambling

Municipal Securities Rulemaking Board: MSRB releases 2012 Rule Book

Bond Buyer: More muniland rule-breaking by Citi, Morgan Stanley and RBC

Bloomberg: States giving out “jobs development” funds and not always verifying results