Good Riddance to Lottery Privatization

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I’m an advocate for privatization of the state liquor stores for a wide variety of reasons, most importantly because I actually take alcohol regulation seriously, and the evidence is clear that PA’s cartel system does a worse job at harm reduction than the average state with market distribution of alcohol. It’s the taxes and the marketing regulations that matter, not *who* sells the alcohol.

Anybody who’s not a hack knows this is right, and once you’ve acknowledged that, then all that’s really left is dumb make-work political arguments – arguments that the public consistently rejects as the least persuasive out there.

Lottery privatization isn’t like this at all, and neither is Philadelphia Gas Works privatization. In both of those cases, the public really gains nothing in service quality or net disposable income from the sale of these entities. If we’re going to have a state lottery, since gamblers will find a way to gamble anyhow, we might as well keep all the money to pay for public services. Inserting a new layer of profit-seeking there doesn’t add anything of public value.

That’s why I’m so glad to see the Corbett administration admit defeat on lottery privatization. I doubt they’re convinced it was a bad idea since they’re ideologues who think private service provision is always better, but we’re all comparing the same legislative and election calendars, and they must understand as well as we do that this was the lowest impact, least likely agenda item to pass.

Republicans should make an election year push on a popular issue for them, like alcohol market changes that voters actually support, and which make Democrats sound stupid.

This entry was posted in Governor, Labor and Unions, Social Services.

12 Responses to Good Riddance to Lottery Privatization

  1. Albert Brooks says:

    Hear! Hear! More attention can now be paid to something more needed like the aforementioned liquor privatization or God forbid……some pension reform.

    • Jon Geeting says:

      Alcohol reform would be a good election year issue for Republicans. They’re not used to being in the Democrats’ position of offering voters nice things they want, rather than trying to take away things. It works really well!

  2. Sean Kitchen says:

    1) Liquor privatization won’t happen because there’s just enough power (they may not be large in terms of money) to swing a couple of votes away from passing the privatization bill. There are more than enough wealthy business owners who’ll stop privatization, especially when it comes to beer. I work for one of those people in as part timer.

    2) One of the legs on Corbett’s 3 legged stool for raising revenues for education funding is GONE. Lotto privatization, liquor privatization and pension reform were all spectacular failures for the Governor last year, and I doubt that he has the political capital to privatize the liquor stores because of what Myerson and Young have done the past few years. That leaves it to pension reform, which is a really dumb issue because DC plans are utter failures that’s going to destroy baby boomers retirement plans. This means that there’ll be less money for schools – because no taxes will be raised and the 3 legged stool won’t be around this year – and an opportunity for the Dems to make an argument for keeping Act 100. Lets hope they do some messaging instead of just hitting the NO button once again…

    • Jon Geeting says:

      I don’t disagree with the assessment of the politics, but keep banging on about this issue to try to help change the politics. Package reform is a no-brainer. There is absolutely no reason why we should have laws restricting who can sell what types of packages of beer, that is insane. That has nothing to do with being a Democrat, it’s about electeds being fucking wusses.

  3. Albert Brooks says:

    Your thoughts on liquor privatization are probably true if beer is included in the way they tried with the modified SB 100. I’d drop package reform out of a liquor bill, impose ownership limits on new liquor licenses and allow liquor licensees to buy existing beer distributors if they wanted. Package reform can come later. That gives a huge profit incentive to existing beer distributors if they want to expand into liquor sales or if they just want to cash out later to a new liquor retailer or maintain the quasi-monopoly that they currently have. Once they see they can’t lose the opposition will dissipate. Since the majority of the population wants to be rid of the PLCB and everyplace that has privatized some or all of their liquor distribution has seen an increase in employment if will be difficult for the opposition to campaign against what the people want and more jobs (and most likely higher revenue).

    • Jon Geeting says:

      I think we probably only get one bite at the apple with this. If package reform isn’t in the bill, it probably never happens. We can’t just do the big stuff and then leave the little things that too few people care about behind. There’ll be no energy to pass them on their own later because everybody will think they’re minor issues.

      • Albert Brooks says:

        You saw what a clusterf*** McIlhinny made trying to appease with package reform. I think it will be easier once people get the taste of what an open market can do. I’d rather have liquor privatization than package reform but obviously would like both even more.

        • Jon Geeting says:

          My biggest issue with the alcohol market is the County Quota system of capped liquor licenses. I want no cap, and if we can’t get that, I want some uncapped beer-only licenses and wine-only licenses so we can get some more bars and restaurants opening in the older core downtowns. It should not cost more than $5000 to get a liquor license, if that.

          Second most important to me is package reform – ending the monopoly R license holders have on six-packs, and letting all grocery stores and convenience stores sell beer.

          After that is state store privatization. I’m not interested in seeing the top two important-to-me goals get thrown under the bus.

          I know why it turned into a clusterfuck, but the correct attitude for Republican lawmakers to have on this issue is “fuck y’all, I’m getting reelected.” The fact is that open markets for beer are going to be more popular than the beer distributors or R license holders, and it’s probably already too late for the various interests to recruit and coordinate around primary challengers for these Republicans. They should just soak the state store unions, the beer distributors, and the R license holders and give something nice to the voters ahead of election season. Too many of them are thinking their job here is to avoid pissing off as many stakeholders as possible, and that’s the kind of approach that’s going to stick us with a not that much less protectionist market.

  4. Albert Brooks says:

    I can understand wanting to see your particular version of things, I do that myself. I don’t think that there will be an uncapped liquor license but opening it up to 3,000 or so will work for me. The current “R” license is already beer and wine so I don’t know why they would split that but I would like to see more also. Obviously, privatizing the state stores and increasing the total number is my main goal not only from a convenience and selection standpoint but that it will also reduce some government and associated costs like the $500 million that is PLCB portion of the state pension shortfall. Saving money is the same as taking in more money and will benefit all the citizens.

    • Jon Geeting says:

      I’m saying they should keep the R licenses as full service licenses but create new unlimited classes of B and W licenses in addition to the R licenses. So somebody wouldn’t have to get an R license to do a beer-only or wine-only bar, for example.

  5. Lew Bryson says:

    Great discussion. Agree whole-heartedly with the original statement: lottery privatization was a bad idea, and I’m glad it’s gone (I’m no big fan of privatization in general). But State Store privatization — along with an overhaul and streamlining of the state’s Liquor Code — is a different cat altogether.

    Package reform is what got me into this in the first place; I’ve been writing to my legislators since 1992 about it. But I’d unwind it from PLCB privatization, and here’s why. The Case Law is THE most unpopular part of the Liquor Code, hands-down. As I blogged in 2010 (http://noplcb.blogspot.com/2010/05/how-losing-six-pack-sales-may-win-us.html), once citizens get relief from the State Store, they’re going to start screaming at their legislators for package reform, and wondering why they didn’t get it already. The legislators will see that the world didn’t stop spinning when they privatized the State Stores, and package reform will go bim-bam-boom.

    Another factor was brought up to me by my local distributor. For years, he said, they’ve been telling us that they can’t do sixpack sales for distributors without giving the tavern owners something. Well, they gave the tavern owners small games of chance, and what did we get? NOTHING. There’s the deal, it’s done. And, he said, sixpacks aren’t even something we want; it’s what the customers want!

    He’s right. The Legislature — the GOP majority — blew this. They could have got a deal for State Store privatization out of SEPTA subsidies in the Transportation bill; they could have got sixpack sales out of the small games of chance bill. They did nothing. Don’t tell me the Governor doesn’t know how to deal and compromise; apparently no one in Harrisburg does.

    As for the “new unlimited classes of B and W licenses,” the Tavern Owners will fight that to the last drop of blood and the last dime of lobbying money. Doesn’t matter that you’re right.

    Still…it is starting to feel like this may be the year. Cross your fingers.

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