Business Irish

Sunday 4 December 2016

Numbers are still coming up for the lotto

Despite the recession, more than two million people play the lottery weekly with sales adding up to €770m in 2010, writes Siobhan Creaton

Published 21/04/2011 | 05:00

The National Lottery was one of the few Irish businesses that enjoyed another good year in 2010, despite the depressed economic conditions.

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Some 2.2 million people still played at least one of the Lottery games every week, wagering €3 or €4 in the hope of banishing their money problems. The 25 Lotto jackpot winners, who shared €420m last year, aren't worrying about the rise in mortgage rates or negative equity.

While everyone else is in penury, their luck is in. Their biggest problem is deciding what to do with their money.

National Lottery chief executive Dermot Griffin says handing massive cheques to the lucky winners is the best part of his job. Just last month, he presented 47-year-old Cork postman Pat Broderick with over €7m that would change his family's fortunes.

"There is such excitement" he says. "They are great days". Last year, two winners walked away with over €16m each.

Sales of National Lottery scratch cards, Lotto tickets and other games amounted to just over €770m in 2010.

This is 5pc below the previous year reflecting more careful budgeting. However, people who play the Lotto traditionally tend to remain faithful in their spending through the good and bad times, according to Griffin.

"Recessionary conditions have had an impact but I am not sure to the same extent as in other areas. People become more focused on managing their funds yet as many people were playing the Lotto last year."

Where people buy their Lotto tickets and scratch cards has changed with newsagents reporting less business while big supermarkets are generating more of this type of business.

"People don't go to the convenience stores as often so newsagents have suffered a drop in footfall. And shopping patterns have changed. People tend to bulk shop, going to multiples and discount stores more often than the local convenience store," he says.

"Consumers are spending between €3 and €4 on a lottery product, so it is not a huge commitment. Research shows the number one reason why people who normally play aren't in the draw is that they forgot to buy a Lotto ticket and not because they couldn't afford it."

One of the key challenges for the Lottery is to keep making it easier for people to play their games.

Within a few years, it is likely that punters will be able to purchase Lottery tickets at every checkout till in a supermarket, rather than having to go separately to the customer service desk.

Tesco is already offering this service to customers in conjunction with the British Lottery operator, Camelot, while some Supervalu shops in Ireland are also piloting this at the moment. But it will take a few years before this is fully developed, Griffin says.

Increasingly, the business will also move on to the internet. Some 15,000 people already play the Lotto online, where it offers eight instant types of games. It has paid out €5.5m in one online jackpot.

As a further incentive, the EuroMillions, which started in 2004, is preparing to swell the potential jackpot. From next month, the new draw will kick off with a guaranteed jackpot of €100m.

A cap of €185m will be set as the jackpot is rolled over and the surplus will be used to create even more millionaires from amongst the second tier winners.

This will increase the odds of winning a few million in these draws, according to Griffin. "We need to keep the draws up to date and entertaining and to keep the excitement" he says. "The jackpots need to be big".

It's not just the winners who do well out of the Lottery, though, as it gives hundreds of billions of euro every year to the Department of Finance to distribute to various projects around the country.

Based on its performance last year, Mr Griffin will be handing around €250m to the department, money that was never more welcome as the Exchequer moves further into debt.

Since its establishment, 25 years ago, the National Lottery has raised close to €4bn on behalf of the Government with the lion's share going to projects in areas such as youth, sports and amenities and health and welfare.

Sectors like the arts, culture and national heritage and the Irish language have also been beneficiaries. "There is probably a backlog of projects to be funded," Griffin says, in light of the depletion of Ireland's public finances.

"The lottery funds can give people a catalyst for projects locally and will go even further now for capital projects because building has become so much cheaper". The National Lottery licence is due to expire at the end of this year and the Minister for Finance will be putting it out to tender. He is under greater pressure than ever to get as much money as he can for it.

Its potential value to a new operator has been considered by the review group headed by economist Colm McCarthy that has examined the entire semi-state sector to identify what can be sold off to raise funds to make a dent in the billions the country is borrowing as part of the IMF/EU bailout.

The licence is undoubtedly valuable, with estimates suggesting it could raise as much as €40m if groups such as Camelot expressed an interest in bidding for it.

Much will depend on the terms the Minister for Finance sets for the new licence, Griffin says.

"The value of it depends on what proportion of the funds generated is to be profit and how much will go to good causes," he says. The new Government will have to take a view on it.

"If it is a 10-year licence then the value is restricted to the cashflow and profit over that period. The Spanish Lottery licence, by comparison, is an indefinite licence and is valued at €3bn," he says. In the UK the government decided to extend Camelot's 10-year licence for a further five years.

All of these options are open to the Minister for Finance under the National Lottery Act.

"There will be a bid for it and you can never gauge who is in for it and who is not. I just focus on running the business.

"We are seen as having a very strong lottery within Europe and our sales per capita are in the top 20 and double what Camelot generates in the UK," he says. The only certainty is that the Lottery will continue to be a big money spinner, whoever ends up running it in 2012.

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