The National Lottery company operated by An Post is “determined” to win the new licence for the business when the terms are announced early in the new year, the chairman of the company has said.
The Oireachtas Committee on Finance heard a submission from Donal Connell, chairman of the National Lottery, today.
Mr Connell said he was waiting to hear the full details of proposals by Minister for Public Expenditure Brendan Howlin regarding the licence process. These were expected in the first quarter of next year.
The operator’s fee was expected to be in the region of 6 per cent of revenue, which would put the annual contribution at about €48 million. The current management fee received by An Post for the lottery is €2.8 million per annum.
Mr Connell said the upfront payment of the licence would be a gain for the Exchequer. He believed the extension of the licence term to 25 years and the potential increase in the operator’s fee payable based on revenue, would make the terms “more attractive” and an upfront payment more feasible.
He agreed the operator’s fee payable could be of the order of “hundreds of millions” under the terms of the licence.
Founded in 1986, the Lottery is run by An Post under licence from the State. Its current licence expires at the end of this year.
Last year the National Lottery had sales of €772 million from lottery tickets and scratch cards. It gave out €419.9 million in prizes and generated a surplus of €243.7 million for good causes. Its costs amounted to €108.4 million.
In April, the McCarthy review on State assets recommended that the granting of a new seven-year licence be the subject of an “open competition”.
Mr Connell told the committee the company was “determined to be successful” in the process.
He said there had been some discussion at board level about what would happen should the company not succeed in its bid for the licence.
If it did not, then he believed most of the 103 employees of the National Lottery would be covered by EU transfer of undertakings legislation and that they would transfer to An Post. He said many of them were employees of An Post on secondment to the lottery company.
If another bidder won the competition for the licence, he said the National Lottery’s employees had done a “fantastic job” and he believed they would be an asset to any new operator.
With regard to being able to maintain the level of payouts to good causes while at the same time paying such an increased licence fee, Mr Connell said there might be scope to reduce the prize payout by “a couple of percentage points”.
He imagined the Minister might also specify the levels of prize payments that might be desirable and what level of payments were expected to benefit good causes.
Mr Connell said he had no view on whether winnings might be taxed, as taxation policy was a matter for the Government.
While the lottery had created over 400 millionaires, it had also paid out hundreds of thousands of smaller prizes as well. If there were to be a tax on winnings, it might make playing “that bit less attractive”.
Deputy Sean Fleming (FF) said he had attempted through parliamentary questions to establish exactly where all the national lottery funding distributed by the Government went. He had not been able to do so, he said.
He noted there was no new scheme for the sports capital grant from lottery funds. And he believed people were not seeing “on the ground” where the lottery funding was now going.
Mr Fleming claimed funds were being used, among other things, for “tarring roads in and out of hospitals” and they were being “subsumed” into budgets in a lot of government departments.
Mr Connell said the National Lottery remitted the funding directly to the Government each week. The company was anxious to ensure it got acknowledgement for funds through the use of its logo in order to “get our name out there”.
But he conceded the company did not have “a full accounting audit trail” of how the funds were allocated.