Lottery funding for good causes could decline under new licensee

Change in funding structure linked to online gaming

Minister for Public Expenditure and Reform Brendan Howlin: move would represent   a change to his stated position of keeping the good cause fund at 30.5 per cent of total annual turnover

Minister for Public Expenditure and Reform Brendan Howlin: move would represent a change to his stated position of keeping the good cause fund at 30.5 per cent of total annual turnover

 


Good causes could receive less from the National Lottery in the future due to planned changes to the rules governing the scheme.

Up to now, the lottery operator has been contractually obliged to hand over a fixed percentage of annual revenue from the sale of tickets and scratch cards to charities and community groups. Under the terms of a new 20-year licence, however, lottery beneficiaries will now receive an unspecified percentage of gross gaming revenues, a substantially smaller pot, which is calculated by subtracting prize payouts from sales.

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

Nonetheless, it represents a change to Minister for Public Expenditure and Reform Brendan Howlin’s stated position of keeping the good cause fund at 30.5 per cent of total annual turnover.


Expressions of interest
The Department of Public Expenditure and Reform signalled the initial phase of the competition for the new licence yesterday by soliciting expressions of interest (EOI) from prospective bidders.

In accompanying documentation, the department said the core objective was to generate a substantial upfront payment for the exchequer, part of which would be used to finance the proposed national children’s hospital.

This would be done while “assuring a seamless transition, continued high-quality operations and increasing contributions to good causes over the life of the new licence.”

It said the change to how good cause contributions would be calculated in the future was “intended to ensure an alignment of interests between good cause beneficiaries and the operator, as the operator will be incentivised to grow lottery revenues, in turn increasing returns generated for good causes”.


Competition schedule
The Department yesterday also outlined details of the proposed competition schedule, which includes a June 7th deadline for EOI submissions.

Prior to this, prospective bidders will be granted access to a virtual data room to review more detailed information on the lottery and the proposed terms of the licence.

Applicants will then be granted three months to “formulate fully funded binding bids” with a provisional deadline of September 16th.

The New Lottery Act, ostensibly designed to overhaul the rules governing online sales which date from a pre-internet age, passed through both houses of the Oireachtas earlier this week, and will be enacted in the coming months.

The Government is banking on the relatively untapped potential of internet sales, which currently represent only 2 per cent of the business, to woo potential bidders.

Gaming and lottery company Gtech has already confirmed it will bid for the licence and that it was exploring a possible alliance with the current operator, An Post.

It is likely to be joined in the competition by An Post, UK operator Camelot and possibly Australian gaming group Tatts.