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
In contrast, Rehab’s lottery made a surplus of €590,000 on its own.
Rehab is seeking a number of orders from the court including that the Minister failed to act in accordance with fair procedures by failing to afford it (Rehab) the chance to make any submission before taking the decision to phase out the scheme.
Both sides have declined to speak to The Irish Times while the judgment is outstanding.
Even if there is an adverse finding against the Minister, it is unlikely he would be compelled to rescind the decision.
Mindful of this, Rehab has opened a second legal front against the Government, and one which is potentially more injurious to the sale of the lottery franchise.
In June, it sent a “Letter of Claim” to the offices of ministers Brendan Howlin and Alan Shatter and Attorney-General Máire Whelan notifying them of the group’s intention to pursue the State for damages of €1.5 billion arising from the National Lottery’s dominant market position.
The letter stated that the manner in which the National Lottery was being operated contravened European competition law.
UK consultants Oxera estimated Rehab had suffered losses of €600 million as a result of the weekly cap on its prize fund and since the introduction of the CLS.
Rehab also said it intended to seek a further €900 million in compensation which it calculated as the likely future losses it would suffer from the sale of the new 20-year National Lottery licence.
Rehab is unlikely to move on its compensation claim prior to the result of its High Court challenge becoming clear, which is expected later in the autumn.
But just how strong a case does it have?
An expert in competition law, who wished to remain anonymous, said government-granted monopolies like the lottery “do offend against competition law”.
However, he said legal precedence suggests the courts are sympathetic to restrictive practices when it comes to gambling “as there are moral and social reasons as to why governments would want to have restrictions in place”.
If it pursues a case, Rehab would have to prove that having one national lottery licence is “disproportionate to what the Government is trying to achieve”, he said.
It would also have to show “the greater good” could be achieved without a ban on competition, maybe by tightly controlling and regulating a small field of competitors.
He said Rehab could make “an arguable case” that the recent liberalisation of gambling laws was designed more around “revenue generation” than restricting the corrosive aspects of gambling.
It would have to prove the reason for the restriction on competition is not for the social good but to maximise the public purse.
While, he said, this may be true in the context of how the next licence is structured, proving it in court would be extremely difficult.
Nonetheless, he said, from the Government’s perspective, it would not be ideal to have a legal case hanging over the next licence, especially if the aim is to maximise the licence fee.
The fact that national lotteries raise money for good causes was not relevant to competition law, he added.
Rehab could either make a complaint to the Competition Authority and/or to the European Commission, or seek an injunction in the High Court on foot of its grievances.
Some international perspective can be found in the UK. Despite racking up record sales of £6.9 billion last year, the operator there, Camelot, says it may not even bid to renew its licence if it continues to face competition from another UK rival lottery.