Good causes to get less from lottery payouts

Good causes will receive substantially less from the National Lottery under the terms of the new licence partly to accommodate an enhanced operator’s fee.

Up to now charities and other beneficiaries have received at least 30.5 per cent of revenue generated from ticket and scratch card sales.

Under the terms of a new 20-year licence, however, the annual contribution to good causes will be set at 65 per cent of gross gaming revenues, a substantially smaller pot, which discounts the cost of prize payouts.

The changes, which are likely to cause unease among beneficiaries, were announced yesterday by Minister for Public Expenditure Brendan Howlin as part of the official launch of the licence competition.

If the new rules were applied to last year’s numbers, good causes would have received about €215 million, significantly less than the €225.3 million they actually received.

While the revised terms are designed to give the next licensee greater flexibility to operate online where margins are smaller, they are also aimed at freeing up more income for the next operator, who is expected to receive up to €50 million a year to operate the business.

The changes represent a significant climbdown on Mr Howlin's original pledge to keep good causes at a minimum of 30.5 per cent of annual turnover. The Minister signalled yesterday the 6 per cent margin paid to retailers who sell lottery products would be maintained under the new licensing terms, a move which is likely to please retailers.

Virtual data room
He also gave more details of the proposed competition schedule, which includes a June 7th deadline for "expression of interest" submissions.

Prior to this, prospective bidders will be granted access to a virtual data room where more detailed competition documentation, including a copy of the draft licence, can be assessed.

Applicants will then be given three months to formulate their bids, with a provisional deadline set for September 16th. Mr Howlin said the upfront payment would be payable in two equal instalments, the first this year and the second next year.

Applicants will be required to meet two key essential requirements – management capability and financial capacity. Subject to meeting the essential requirements, Mr Howlin said the applicant who submits the highest licence fee proposal will be deemed the preferred applicant.

"We have to be innovative and creative in how we raise funds; by seeking an upfront payment for the lottery licence we can provide part-funding for the new national children's' hospital without having to source that level of cash by reducing expenditure in other areas or raising additional taxes.

'Growth of the lottery'
"In addition, I'm looking to boost the annual revenues that will be available for good causes on an ongoing basis by promoting the growth of the lottery and closely aligning the interests of the licensee and the State."

Gaming and lottery firm Gtech has already signalled its intention to bid for the licence and that it was exploring a possible alliance with the current incumbent, An Post. It is likely to be joined in the competition by UK operator Camelot and Australian group Tatts.