Friday 19 January 2018

Cabinet to rule on sale of €600m Lotto licence

Nick Webb

Nick Webb

Davy appointed to advise on disposal of semi-state's big money-spinner

Brendan Howlin is expected to bring proposals for the sale of the €600m National Lottery to Cabinet by the end of the month.

It is understood that the Government is looking at licensing out the operation of the lottery for between 20 to 30 years, receiving a major lump of cash upfront as part of the deal. Davy stockbrokers has been appointed to examine a number of strategic options for the semi-state company.

A number of parties have expressed interest in the semi- state company since the Government indicated it was on the block before Christmas.

Camelot, the UK operator of the British and California lotteries, is understood to have held a number of meetings with the Department of Finance in recent weeks. Camelot is owned by the Ontario Teachers' Pension Plan following a €465m buyout in 2010. State lotteries are seen as solid income streams -- like utility companies. This has prompted interest from groups such as the Ontario Teachers' Pension Plan, which fought off CVC, BC capital partners, Providence Equity and a French lottery group to buy Camelot. Along with private equity groups, listed bookie Paddy Power is also believed to be interested in the lottery.

However, the Government's plans to raise the €600m-plus -- already earmarked for the national children's hospital -- may depend on slimming down the number of interested parties. An Post, which has run the National Lottery since its foundation, is believed to be interested in holding on to the valuable business. But sources close to the bidding suggest that some of the most serious suitors may decide not to pursue their interest if An Post is allowed to bid.

Last Friday the Department of Public Expenditure said "the intention is to have a competition so we can't exclude anyone from bidding."

Government advisers are focusing their attention on three key issues ahead of making recommendations to Cabinet. These include the contribution levels, how much money the operator pays to good causes; the potential term of any license; and the overall price tag for the company.

The National Lottery has been hit hard by the recession, with the amount of money given to good causes dropping sharply in recent years. The semi-state company has also failed to make any major impact online, with small numbers of players buying tickets over the internet.

Sales of the Greek and Spanish state lotteries have hit the skids in recent months due to the eurozone debt crisis. The planned IPO of Spain's "El Gordo" lottery was pulled before Christmas.

However, with the troika breathing over its shoulder, the Government is pressing ahead with the disposal of state assets to raise money for debt reduction and job projects.

"The intent is there and we want to maximise the return to the State," said the Department.

If the Cabinet greenlights the sale of the lottery license a competitive tender will be issued to interested parties. It is thought that this could happen by June, with any sales process complete by the end of the year.

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