It looks like control of the state lottery system will remain in the hands of Pennsylvania, for now.
The state's new Attorney General, Kathleen Kane, says the contract between the state and a private company violates state law.
Some people are playing this up as a growing rift between Governor Tom Corbett and Attorney General Kane.
Kane says this is not part of a battle.
She says it's her office upholding law for the Pennsylvania residents.
There was the promise of a lot of money for seniors in the state if Pennsylvania privatized the lottery system.
Pennsylvania Attorney General, Kathleen Kane, says that was putting the cart before the horse.
“This finding makes no determination regarding policy or the wisdom of the business decision," said Kane. "Only the legality of the contract.”
Kane says the proposed contract between the state of Pennsylvania and Britain's Camelot Global Service violates the state constitution in three areas.
One aspect of the contract calls for more games.
“The contract provides for the development of monitor based or other electronic games such as Keno which is not authorized by the state lottery act and usurps the authority of the gaming control board with regard to slot machines,” said Kane.
“Kathleen Kane made it very clear that she had issue with a major element of Tom Corbett's work while he was attorney general during the investigation of the Jerry Sandusky scandal,” said Chris Borick, director of the Muhlenberg Institute of Public Opinion.
Some think the decision will further increase the rift between Kane the Democrat and Corbett the Republican.
Something that could make it hard for the two offices to work together.
“You have to imagine," said Borick. "Every move that the governor makes has to have a lens for how that is going to be treated by the attorney generals office.”
In a statement, Governor Tom Corbett said, "I'm deeply disappointed. I don't agree with the attorney general's analysis and decision, and we will review our legal options."
“We review approximately five thousand contracts a year," said Kane. "And while most are approved, we do not rubber stamp anyone of them.”
Political analyst say it looks like Kathleen Kane is going to take a more broad approach to the protecting the people of Pennsylvania instead of only focusing on criminal cases.