Friday 15 December 2017

Losses on charity scratchcards funded by taxpayer, High Court hears

EVERY euro spent on scratchcards produced by some charitable lotteries involves a loss of two or three cent which is being made up for by taxpayers money, the High Court heard.

Brian Kennedy SC, for the Minister for Justice and Equality, said people buying these cards would not regard as good news the fact that while they were contributing to a good cause, their taxes were being used to make the charities’ lotteries profitable.


The court heard the scratchcard lottery operated by the Rehab Group was profitable but others run by other charitable organisations were loss making.


Some had been described as “Zombie lotteries” by the Rehab’s own director Frank Flannery, Mr Kennedy said.


He was speaking on the second day of a challenge by Rehab to the Minister’s decision to phase out assistance for lotteries run by charities under Charitable Lotteries Scheme (CLS) which set up by the Government in 1997.   Rehab receives the bulk of the annual €6m yearly allocation which is due to drop to €1m before it is abolished in 2016.


The Minister says it is necessary in view of the public finances but Rehab says it will do irreparable damage to its work in helping the disabled and socially disadvantaged. 


Rehab seeks orders quashing the Minister’s decision and says the CLS  is necessary because of the uncompetitive position it is placed in by having  a €20,000 per week cap on its prize fund compared to an almost unlimited fund enjoyed by the dominant player in the market, the National Lottery.


Opening the Minister’s case yesterday, Mr Kennedy said at a November 2011 meeting, Rehab’s Mr Flannery told Minister Alan Shatter that “pulling the plug” on the CLS would be “a serious breach of faith” and it would be morally wrong to do so.


Mr Kennedy said the decision to phase out the CLS was a general policy matter.   In 2004, there had been a review of the CLS which was favourable to Rehab and in 2011 there was another review which led to the decision to phase out.   But both were general policy decisions made in the general interest by the Minister.


For better or worse, the Minister considered that the CLS was not an efficient fund raising scheme although Rehab disagreed with that, counsel said.


It was also never intended to be a permanent scheme and Rehab had accepted it would be subjected to regular reviews. Rehab had also accepted it had no legitimate expectation that it would continue indefinitely, he said.


Mr Kennedy said the court should have regard to the fact that Rehab has an annual turnover of €185m and the CLS accounts for just two per cent of that, although he accepted this was a larger figure in terms of Rehab’s profits. 


Funding for the CLS ultimately comes from the Exchequer, even though 65 per cent of it is from the National Lottery surplus.  There was no reason why it should not be subject to the same rigours as other State expenditure, he said.


The hearing continues before Ms Justice Iseult O’Malley.

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