Retailers call on Howlin to publish new lottery licencing terms

Independent traders are worried their margin on sales may be eroded under the new system

Mon, May 20, 2013, 13:01

Retailers have called on Minister for Public Expenditure and Reform Brendan Howlin to publish the proposed licence to operate the National Lottery amid concerns their margin on ticket sales may be eroded under the new terms.

Mr Howlin’s department said earlier this month that details of the new licence would only be available to parties that have expressed an interest in the upcoming bidding process, and who pay €100,000 to enter its virtual data room.

RGdata, the umbrella group for independent traders, said it was anxious to ensure that the existing 6 per cent margin paid to retailers who sell lottery products would be preserved in the planned sale process.

“Retailers, who are already operating in a very challenging environment are deeply concerned that any new operator of the licence will erode the existing margin of 6 per cent in an attempt to recover the hundreds of millions that they are likely to pay to acquire the licence,” RGdata’s Tara Buckley said.

“At a time of unprecedented pressure for retailers, any cut to the National Lottery margin, could be the difference between success and failure for retailers.”

“There are also concerns that the new licence could allow a new operator to cull the existing agency network and cherry pick or offer preferential terms to particular retailers.”

Ms Buckley said she was calling on the Minister to publish the terms of the National Lottery licence now to allay the concerns of retailers about the threat to their margin arising from the disposal of the licence.

In an address to the Seanad last year, Mr Howlin pledged to maintain the 6 per cent margin on sales lottery currently enjoyed by retailers.

Under the terms of a new 20-year licence, lottery beneficiaries will now receive an unspecified percentage of gross gaming revenues, which is calculated by subtracting prize payouts from sales, as opposed to a proportion of overall revenue.

The move is designed to give the next licensee greater flexibility to operate online where margins for certain game products are substantially smaller.