Markets in everything, deficit spending edition

by on January 25, 2007 at 4:02 pm in Political Science | Permalink

The Illinois lottery may be up for sale.  The current status is discussed in yesterday’s NYT.  The state hopes to get $10 billion.  The lottery had $630 million in profits last year on sales of $2 billion.  The buyer would get all profit for 75 years.

Here is the source.  Larry Ribstein remarks: "Yet more evidence that a hedge fund is no match for a politician when it comes to short-term thinking."

1 Steve Sailer January 25, 2007 at 4:13 pm

How about establishing, then privatizing, a salt monopoly?

2 JoshK January 25, 2007 at 4:39 pm

But we can’t legalize gambling, that would be so wrong.

3 Bernard Yomtov January 25, 2007 at 4:50 pm

It’s hard to see how this can be a good deal when you take federal taxes into account. A private company would have to pay income tax on its profits that the state doesn’t have to pay, so the after tax cash flow to the state is greater that to a private buyer.

Besides, if Illinois needs $10 billion what about issuing bonds against future lottery proceeds. Seems like a cheaper way to raise money.

4 Stranger January 25, 2007 at 6:01 pm

Everything comes back in style, including tax farming. Coming soon near you, privatized IRS.

5 Tim V January 25, 2007 at 7:03 pm

Let’s see… that’s about a 6% ROI. More expensive than Illinois bonds, I would guess, which makes it short-sighted, though not as bad as I’d have guessed.

6 Derek Lowe January 26, 2007 at 8:58 am

Profits are over 30% of sales? What a business. I wish that we did that well in the drug industry, let me tell you.

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