The odds of winning the Virginia Lottery may be better than chances that the state turns it over to private business.

But that's not stopping some politicians, policymakers and plutocrats from discussing the idea, particularly when the declining economy has Virginia scrounging for dollars.

"If we're not going to raise taxes and we're not going to cut expenses, then we have to find a third way," says Del. David E. Poisson, D-Loudoun, a proponent of a privately run lottery.

Poisson's legislation to put the 20-year-old lottery in private hands was ignored by the 2008 General Assembly. It went no further than a House committee, where it died without a public hearing or vote.

Poisson's bill did not specifically mandate the sale or lease of the lottery; rather, it required the five-member board that oversees the game to study options for privatization by July 2010 and make a recommendation to the General Assembly.

Such a shift would be of particular interest to the lottery's primary beneficiaries, the state's public schools, which last year shared $437 million in game profits on sales of $1.3 billion. Educators and their allies in the legislature would likely demand guarantees that privatization does not threaten profitability.

But there may be few assurances for lottery employees. The agency currently has about 250 workers. Some of them would move from the government to corporate payroll, with hiring decisions ultimately falling to a private business.

One of 43 states with lotteries, Virginia joins a growing number in which the Wall Street-supervised sale or lease of their games or other assets -- highways, harbors and airports, for example -- are advocated as a quick play for cold cash.

The appeal of such initiatives also is driven by the supposed market value of such assets, which privatization opponents liken to family silver -- something supposedly safeguarded for future generations. Poisson says investment firms suggest the value of the Virginia Lottery is $5 billion to $8 billion, a figure cited privately by financial experts.

Vermont's governor wants to lease his state's lottery for $976 million, but this month lawmakers there said they are prepared only to study the proposal. Privatization has been pushed in the District of Columbia, Indiana, Rhode Island, Illinois, New Jersey and California, home to a mammoth lottery valued at $14 billion to $37 billion.

So far, not one has gambled on a privately run lottery, which is often the rule in Europe and Asia.

Paula I. Otto, the new director of the Virginia Lottery, says the reluctance of American lotteries to privatize may be rooted in an important selling point for players: that the games are public.

"Because lotteries have been operated by government, at least modern lotteries, there is a trust factor, there is an integrity factor that for the public feels right," says Otto.

Chicago-based Independent Lottery Research, which monitors state-run games, conducted a survey last year that shows that the public is aware of lottery privatization but uneasy with it.

One-quarter of respondents say a privately run lottery would be more efficient than a government-operated game. But 49 percent worry that a privatized lottery would be less profitable.

Wall Street argues otherwise.

Investment giants -- among them, Morgan Stanley, Lehman Brothers, Goldman Sachs, UBS and JPMorgan -- are trying to piece together privatization deals that supposedly could produce additional lottery profits.

Typically, such packages would include an up-front payment to the state, coupled with annual distributions over 40 years. The agreements also would allow for a government to take back the game should the privatization fail or fall short.

Negotiated lease terms may go beyond the cost and include easing perceived obstacles to profitability; in the case of a lottery, legal restrictions on games and advertising.

Virginia law prohibits the lottery from using promotions that could be seen as inducing people to play. Instead, radio and television commercials, bus and highway billboards and point-of-purchase displays can be only informational.

It will be another year, when the General Assembly returns for its regular annual session, before these issues are addressed -- if at all. Poisson is planning to introduce his lottery-privatization bill again in 2009, a House and gubernatorial election year.

Even the most forceful advocates of an expanded role for the private sector in government operations doubt that Virginia is ready to part with its lottery.

In what may have been an understatement, Del. Christopher B. Saxman, R-Staunton, head of the bipartisan Cost-Cutting Caucus, said, "Virginia tends not to be a leader in that regard; it tends not to get out ahead on too many controversial things."
Contact Jeff E. Schapiro at (804) 649-6814 or jschapiro@timesdispatch.com.