Privatization of US State Lotteries Could Lead to an Influx of Up to US$80 Billion Into Empty State Coffer

London (PRWEB) July 25, 2005

A study completed by the consulting firm MECN analyzes the privatization of state-controlled gambling businesses, one of the most relevant and controversial issues among state shareholders. The study includes the results of MECN’s privatization survey of more than 90 industry experts who offered their unique insights and assessments.

Hard-to-control Internet gambling and the intensive debate about increasing liberalization make life difficult for state-controlled operators. Although they recently won some “battles,” according to many experts business will not get any easier for them, and the value of state-controlled operators will probably decrease rather than increase in the future.

This fact combined with tight budgets might lead a growing number of state shareholders to see the regular contribution to state budgets in jeopardy and prompt them to consider privatizing their gambling operations as soon as possible. Martin Oelbermann, director of MECN, adds, “Indeed, recent and ongoing privatizations, such as those of the Greek OPAP and the UK tote, show that this is not just idle speculation.” Furthermore 73% of experts surveyed expect that the number of privatized state lotteries will continue to increase in the near future.

Regarding the monetary potential of privatizations, most experts anticipate amounts in the billions. According to Martin Oelbermann, “If we applied the current valuation, for example, of the privatized Greek provider OPAP, which is listed on the stock exchange, to US state lotteries, we’d be talking about a total value of ca. US$80 billion.“

But Mr. Oelbermann also warns against acting in haste: “Little is known about the concrete advantages and disadvantages associated with the privatization of the gambling sector.” The current study therefore takes up some of the most crucial topics, for example:

• Uncertainty regarding actual improvements in efficiency through privatization - Many survey participants believe that improved efficiency will be one of the advantages of privatization, but this is not always the case. For example, the New York Lottery and the California Lottery are already operating more efficiently than many a private provider.
• Expansion of the market as a result of privatization - Of those surveyed, 57% believe that companies would be less concerned about the common good and that therefore the gambling market would expand as a result of privatization. Private companies would thus have to be strictly regulated, much like the tobacco industry is now.

The study can be obtained at http://www.privatisation.mecn.net

About MECN:

MECN is a network of experts on issues concerning the media and entertainment industry. Together they provide in-depth knowledge, analysis, and advice to global clients.

Contact: Martin Oelbermann, Tel: +49(0)89 3835 6785, e-mail:pr@mecn.net

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