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Ontario’s lottery privatization long overdue, but don’t bet on seeing it

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It's a refreshing change to see the Ontario government embrace a privatization initiative. On Monday, the Globe and Mail revealed Ontario is taking steps to privatize its lucrative but stagnant lottery business, by inviting bidders to operate the system that the province would continue to own.

Of course, it's bidder beware. For some reason, Ontario just can't shoot straight when it comes to privatization. The last Conservative government came up short in its electricity privatization efforts and signed a controversial concession to build the Highway 407 toll road. Meanwhile, the attempt by the subsequent McGuinty Liberal government to tear up the Highway 407 contract was misguided and ultimately fruitless.

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The Liberals then ignored their own commissioned report that promised a lucrative return from privatizing its liquor store business. Their creation of Ornge – a publicly funded air ambulance service that was funded by government but acted like a profligate quasi-private company accountable to no one – was a complete failure.

When the McGuinty government finally got around to the idea of a partial privatization of its assets, the brilliant idea was to combine the Liquor Control Board of Ontario, Ontario Power Generation, Hydro One and the Ontario Lottery and Gaming Corp. into an unwieldy "super corporation" and sell a minority of shares to the public. The idea that the public would want to hold a minority stake in a jumbled conglomerate controlled by a politically-minded government made little sense and mercifully died a quick death.

But despite these past failings, the government should not be dissuaded from moving ahead on the lottery business initiative. Ontario remains mired in a sluggish financial state, and privatization of cash-cow businesses that would be better handled by private operators while still returning tax dollars to the province's coffers continues to make as much sense as it has for years – and more so even now, given the troubled state of the province's finances.

Whether it has the guts under new Liberal premier Kathleen Wynne to carry through is another matter. As for her opponent, Conservative leader Tim Hudak is a more serious proponent of privatization to the fore – but there's no guarantee he would get it right either.

So best of luck to any would-be private operators who have their sights set on running the province's lottery system. Based on Ontario's track record, it's no sure bet this initiative will go through either.

Sean Silcoff is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers. Click herefor more of his Insights, and follow Sean on Twitter at@seansilcoff.

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About the Author

Sean Silcoff joined The Globe and Mail in January, 2012, following an 18-year-career in journalism and communications. He previously worked as a columnist and Montreal correspondent for the National Post and as a staff writer at Canadian Business Magazine, where he was project co-ordinator of the magazine's inaugural Rich 100 list. More

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