Back to headlines Back to Front Page Feedback

Scandal looming in the sale of the Texas state lottery

By Paul Hill

HOUSTON - Bush Crony Texas Gov. Rick Perry has raised the public's eyebrows once again. Perry's staffers have been cooking up a scheme for six months with Texas former Senator Phil Gramm to sell the state's lottery. The Austin American Statesman and Houston Chronicle have detailed the intricacies of the corruption involved in this proposal. Gramm is now an "investment banker" and is vice Chairman of UBS, which is one of the corporations along with Morgan Stanley which would benefit from the sale of the lottery. Also, former Perry staffers who are now lobbyists stand to score big on any sale of the lottery. However, the money trail does not stop here. UBS recently hired Perry's son, Griffin, and some speculate that this was "payback" for Perry's favors.

Texas' efforts can be seen as part of a larger effort to privatize public assets. Recently, several transportation projects including the Chicago Skyway and Indianapolis toll roads have been sold to private interests. Illinois, Indiana and New Jersey are exploring the possibility of selling their lotteries.

UBS and Morgan Stanley have made presentations to Phil Wilson, Perry's deputy chief of staff and former Gramm employee, which conclude that selling the lottery over the next 40 years would be worth at least $14 billion and possibly more. The lottery currently puts $1 billion worth of revenue into the state every year.

Gramm was infamous for being the darling of bankers, real estate tycoons and energy moguls when he was a Republican Senator from Texas. He was tied to a Savings and Loan scandal which cost American taxpayers hundreds of billions of dollars. Glaxo, a drug company, made a corporate jet available to him for the cost of a round trip ticket on any domestic flight during his campaign for President. His wife, Wendy, sat on the Enron corporate board and Enron was one of Gramm's major campaign contributors.

Texans would be well advised to become informed about AFSCME Council 31's position with regard to selling the Illinois lottery before swallowing Perry's proposal hook, line and sinker. Interestingly, Illinois Gov. Rod Blagojevich, a Democrat, proposed the idea of privatizing the state lottery about six months ago, which is the same time the Texas Gov. started incubating the idea. AFSCME blasts the Illinois governor's plan as "anything but responsible." They point out that "Observers have rightly noted that, while the lottery privatization plan is presented as a way to provide more dollars for public schools, the gimmick would actually wreak further fiscal havoc on the state of Illinois." "It is never prudent to sell a public asset for a one-time lump of cash that is spent on operating costs…Wisconsin and Michigan in recent years both rejected lottery privatization plans as poor fiscal policy," AFSCME budget analysts conclude. Accountability of a private lottery would be difficult and oversight would be politicized. Many are noting that this trend of selling off public assets is not only scandalous, but is a response to the financial crises that many states are facing.

Rick Casey of the Houston Chronicle reminds us that lotteries prey on the poor. "Low-income people…see the lottery as their only way out of poverty, and bet more than they can afford in desperation," he wrote in his article. Lotteries are, of course, regressive, voluntary taxes on working people, and should be abolished anyway. Privatizing them would only increase the intensity of the exploitation of working people and expand the profits of the wealthy.

Back to headlines Back to Front Page Feedback