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Howlin hopes to gain €600m windfall from sale of Lottery

THE Government is hoping to reap a windfall of as much as €600m after announcing plans to sell the rights to operate the National Lottery for the next 20 years.

The sale was announced by Public Expenditure and Reform Minister Brendan Howlin last night.

Under the new plan, bidders will have to offer a one-off upfront fee to buy the rights, as well as funding lottery grants for "good causes" in the future.

Cash from the upfront fee has already been earmarked for the National Children's Hospital.

The National Lottery, including the TV Lotto and scratch cards games, has been run by state-owned An Post since it was launched back in 1987.

In 2010 sales were €772m, €420m was handed out in prizes and €244m was shared out among good causes.

Now international players will be allowed to bid for the licence for the first time.

Interested bidders are likely to be asked to submit sealed envelop bids to buy the licence when an auction is held at the end of the year.

Canadian-owned Camelot, which runs the UK lottery, already looks certain to join in the bidding.

Last night the company said it "welcomed" the decision to auction the licence, but said it would have to "digest" the scheme before submitting a bid.

Meanwhile, a spokesman for An Post confirmed that the state-owned business would actively compete for the new licence.

An Post is expected to need a financial partner, however, to meet the cost of the high-stakes auction process.

Lucrative

Operators in France, Italian gaming giant Lottomatica, and even bidders from as far afield as Australia, are all known to be interested in buying the lucrative rights to run the Irish games.

Details of the tendering process for the new licence were announced by Mr Howlin yesterday.

An Post's licence was due to expire last year but was extended until 2013 to allow time for the new rules to be drawn up and to facilitate the new auction.

Last night, the Government remained tight-lipped on how much it expected to earn from the auction -- but it is understood to be hoping for an upfront fee offer of €400m to €600m.

The Australian state of New South Wales became the first authority anywhere to charge an upfront fee for a lottery licence last year. It was paid €665m for the 40-year rights to operate a lottery similar in size to the National Lottery here.

Tatts Group, which won the tender, is also known to be looking at Ireland.

Proceeds from the upfront fee will go towards building the National Children's Hospital, but the move towards a private operator does not mean any sports clubs, arts events or social initiatives now financed by Lottery grants will lose out.

The new operator will still have to hand over 30.5pc of all sales to support "good causes", Mr Howlin said.

The 20-year licence is seen as lengthy -- but means bidders will pay more upfront for it.

Many of the details of the new licence have yet to be worked out. Detailed proposals will only be published in June or July, and at that stage bidders will be asked to come forward.

Legislation is expected to be in place by the autumn, with the licence due to be awarded in January.

Irish Independent