Lottery deal legality questioned

SPRINGFIELD - Plans to lease out the Illinois Lottery for billions of dollars could be in jeopardy after federal authorities recently said such deals might be illegal.

On Friday, Indiana's governor abandoned the idea of privatizing the Hoosier Lottery, pointing to a Department of Justice opinion saying states must retain control over all significant business decisions and equity interest in lotteries.

Federal law prohibits lotteries but has exemptions for those run by states.

Illinois is considering a similar lottery deal that would lease out the right to collect losing lottery tickets for years to come in exchange for billions upfront. The state had hoped to pocket $10 billion or more from such a deal to finance construction spending.

The Department of Justice filing is not binding, but throws up a serious political hurdle for Illinois and the handful of other states considering privatizing their lotteries. If nothing else, it would almost assuredly be the basis of a federal lawsuit should any deal emerge from Springfield. The House and Senate approved competing lottery lease plans this year.

Gambling opponents, who feared a privately run lottery would cross the line with its marketing tactics, were spreading news of the situation Monday.

However, a spokesman for Illinois Gov. Rod Blagojevich suggested Illinois' plans may still qualify under federal law.

"We are still reviewing the advisory opinion promulgated by DOJ. However, we were aware of the federal statute ... and crafted our enabling legislation, as well as the terms of our agreement to comply with the statute," said spokesman Lucio Guerrero.