Wednesday, October 17, 2007

Former Sen. Phil Gramm pushing TX lottery sale

Interesting story in the Sunday Business section of the NYT: Some states consider leasing their lotteries. I knew that Texas was contemplating a sale of its lottery, but I didn't know that our former Senator stands to make a bundle if it happens. Sen. Phil Gramm is now vice chairman at UBS. The investment banks are pushing these sales and leases as they stand to make millions in fees off of deals in the tens of billions of dollars. I'm sure Gramm would argue this is a win-win for Texas and UBS.

The money is very tempting to cash strapped states but I question the societal impact of privatizing these operations, which are in practice a voluntary regressive tax on the most vulnerable in our society. I actually agree with the social conservatives that tried to stop a state lottery when it was first proposed. They are bad for society. Add in agressive marketing by a private firm and they become even worse.

Gov. Rick Perry's spokesman is quoted in the article as saying the governor likes the idea of getting the state out of the gambling business. I guess that's OK, but the gambling business will only grow in a state that undertakes this, otherwise the investment bankers wouldn't be trotting out such huge figures (TX's lottery valued at $10-$38B). That's bad for Texans, no matter how much money they throw at us.

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