I've highlighted the logical incongruities of Governor Perry's plan to sell off the Texas Lottery, but as I'm not what I'd consider a financial expert, I wasn't sure if I was missing something obvious. Now, thanks to Vince, I see that some people who are genuine financial experts have the same kind of doubts.
Without additional state money, "there's a high probability that they would run out of money in 20 or 30 years," said Philip Cooley, a professor at Trinity University in San Antonio. Aides to Mr. Perry said their numbers were solid.
At the same time, a lottery run by a private company could be more efficient and easier to police than the state-operated system, some analysts and one lottery watchdog said.
Mr. Perry has suggested the state could get $14 billion from the sale of the lottery, and experts interviewed Tuesday said the sale price could be even higher.
"It ought to be a bigger number," said Jerry Love, chairman of the Texas Society of Certified Public Accountants, after performing a rough valuation of the lottery based on public data.
The 9 percent investment return may be possible, but only if the state is willing to invest aggressively. Stocks have typically returned 10 percent annually over long periods.
"It's optimistic," said David Wyss, chief economist of Standard & Poor's, the Wall Street ratings agency. "Potentially, it's doable, but only if you're willing to invest in a relatively risky portfolio."
Ted Royer, a spokesman for Mr. Perry, called the 9 percent expected annual return conservative for any long-term investment and said the state comptroller had signed off on the projection.