Governor Tom Corbett says he's dropping plans to privatize the Pennsylvania Lottery.
Corbett announced Monday that his administration will not continue to pursue a private management agreement with UK-based Camelot Global Services.
Instead, Corbett said his administration will look for other ways to grow Lottery revenue.
"Our continued goal is to ensure a growing, predictable revenue stream for senior programs to meet the growing demand, and we will continue to work with all stakeholders and interested parties to explore new ways to harness market resources to enhance our Lottery's continued success," the governor said in a statement.
Camelot was awarded a contract to manage to lottery in November 2012 and promised at least $34.6 billion in revenue over 20 years.
Corbett said the deal would have increased profits by up to $5 billion. He said the additional revenue would have kept up with the anticipated demand for Pennsylvania's growing senior population.
Opponents argued the deal was rushed and too secretive, and that senior programs would have suffered.
The contract was rejected in February by state Attorney General Kathleen Kane's office, which called it unconstitutional on several grounds.
Kane said lottery management and policy should be set by the Legislature, not the governor, and that Corbett usurped the power of the Gaming Control Board when he opted to allow Camelot to expand the lottery into online games and keno.
The state's auditor general, Eugene DePasquale, called on Corbett to drop the idea earlier this month.
Earlier this month, DePasquale released a report showing an estimated $4.6 million was spent on consulting fees and travel expenses associated with the deal. The original cost was estimated at only $725,000, DePasquale said.
"People were spending within federal per diem rates, the hotels weren't at some plush resort or spa -- we didn't find any of that," he said. "But the overall price tag was taking away from Pennsylvania senior programs, and that was my biggest problem."
This also saves 150 state lottery jobs that would have been in jeopardy under the deal. The Pennsylvania AFL-CIO released a statement Monday, saying it was "relieved" Corbett decided to let the deal expire.