Rehab raises the stakes in lottery battle
The organisation’s current High Court case against the Government is just the first throw of the dice in the dispute over the national lottery licence
Rehab’s legal skirmish with the Government over lottery funding may seem like reckless brinkmanship on the part of an organisation so reliant on State money.
By the same token, the last thing the Government wants is a legal challenge hanging over the lottery licence as it seeks to sell off the franchise.
Rehab is the State’s largest non-profit organisation, with several prominent charities and commercial enterprises operating under the brand.
It is perhaps best known for its disability charity Rehab Care, which accounts for 20-25 per cent of its business operations.
In 2011, the group had an annual turnover of €185 million, of which €54.4 million came directly from the State.
Minister for Justice Alan Shatter’s decision to pull the plug on funding for charity lotteries has soured relations between Government and Rehab, the main beneficiary of the funding.
While Rehab’s High Court challenge against the decision is being fought largely on a technicality around ministerial procedures, some see it as the opening salvo in a war over the Government’s right to license a gaming monopoly, namely the National Lottery.
The Charitable Lotteries Scheme (CLS) was established in 1997 to compensate charity lotteries, which are subject to a weekly prize cap of €20,000, in contrast to the National Lottery which pays out millions each week in prizes.
This regulatory position means that charity lotteries are essentially prevented from competing with the National Lottery. As a result, the National Lottery operates an effective monopoly with a 98 per cent market share.
Prior to the National Lottery’s establishment in 1986, Rehab Lotteries commanded 25 per cent of the market; now it has just 1 per cent.
The remaining 1 per cent share is split between a host of smaller charities, including the Asthma Society of Ireland, Gael Linn, the Irish Cancer Society, the Polio Fellowship of Ireland, the Irish Society for the Prevention of Cruelty to Children and the Irish Lung Foundation.
Rehab is the largest beneficiary of the CLS scheme and claims it will suffer the “greatest adverse impact” from its abolition. It received €4.4 million of the €6 million available in 2012, and has received around €80 million in total since the scheme began.
In the course of the two-day case last month, its lawyers argued that ending the scheme would irrevocably damage Rehab’s core activity of helping the disabled and the disadvantaged.
They maintained the CLS was necessary as Rehab was placed in an uncompetitive position as a result of the cap on its prize fund compared to an almost unlimited fund enjoyed by the dominant player in the market, the National Lottery.
Rehab believes that if the funding has to be removed, then so should the cap on prize money – essentially that the Government can’t have it both ways.
Lawyers for Mr Shatter argued that ending the scheme was necessary given the squeeze on public finances, and that the Minister’s decision had been made in the public interest.
They also maintained the scheme was never intended to be permanent and had been subject to reviews in the past.
It was claimed that taxpayers’ money, which funds the CLS scheme to the tune of 35 per cent, was being used to prop up loss-making “zombie” lotteries.
In 2012, the Irish Cancer Society’s lottery made a surplus of €94,000 but only after a payment of €190,000 from the lottery compensation scheme.