The new National Lottery licence is to be awarded for a 20-year period in an attempt to secure the State a large upfront payment.
Announcing details of the upcoming competition for the licence today, Minister for Public Expenditure and Reform Brendan Howlin said a fixed percentage of 30.5 per cent of annual turnover for good causes would be retained under the new terms of the licence.
It is expected that a longer licence term will attract international bidders and secure a large upfront payment for the exchequer, thought to be in region of €400-€600 million.
The present licence was issued by the Minister for Finance in December 2001 to An Post National Lottery Company, following a formal tendering process. An Post operates the lottery for an annual management fee of €2.8 million.
Last November, the Government extended the term of the current licence until the end of June 2013 in order to allow time to put in place the competitive process for a new licence.
The Government has already earmarked €200 million from the proceeds for the new National Children’s Hospital.
Mr Howlin said today the Government needed to be “innovative and creative where opportunities arise to generate additional resources for the State”.
He said the awarding of this licence for a longer duration presented “a real pportunity for the State to generate funds that will benefit the community and provide essential services through providing significant funds towards the construction of the National Children’s Hospital”.
“In addition, I am locking-in a sizeable future revenue stream as part of any deal. The ongoing money towards good causes will be retained at current percentage levels. This will be a good deal for the State and the taxpayer.”
“Where the State identifies options to generate additional revenues that don’t impact on taxpayers we need to pursue them.”
Preparatory work, including legislative changes, will be prioritised. Mr Howlin said the process would also respect the statutory employment position of existing National Lottery staff.
Mr Howlin said legislative change would be required to deal with future regulation and to address issues around online sales.
“The online applications and processes of the National Lottery need to be modernised. Globally lotteries are doing more business online and in the context of a 20-year licence we need to provide for this but in a manner that has sufficient safeguards,” he said.
Despite the global downturn, the Government has been approached by several interested parties since it announced its decision to sell the licence last November.
An Post, which has operated the National Lottery since it was established in 1986, is likely to face stiff competition to retain the licence from several international operators which are known to be eying the Irish business.
Gtech, which is a subsidiary of Italian gaming giant Lottomatica [ the world’s largest lottery operator], has also expressed an interest in acquiring the Irish licence.
A spokesman said today the company noted with interest the announcement by Minister Howlin regarding the licence, saying: “We will review the expressions of interest document when it becomes available.”
UK operator Camelot, which already operates in Northern Ireland, is also understood to view the Irish business as a nice fit for its existing operations.
A Camelot spokesman said: “We are currently reviewing it and once the detail is available we will make a decision on next steps.”
“The Government has only just announced its headline approach to the new national lottery licence and we await with interest more information on the plans for the lease structure before making a final decision on whether to participate further.”
Another likely bidder is the Australian gaming company Tatts Group, which recently won the right to operate the New South Wales state lottery, and which has expressed an interest in acquiring the licence under certain conditions.
Lottery sales in Ireland have fallen sharply in the recession, significantly reducing the amount of money diverted to good causes.
Minister Howlin acknowledged yesterday that lotteries in other countries were doing more of their business online, and that the terms of the new Irish licence would “need to provide for this but in a manner that has sufficient safeguards”.
He also indicated his intention to appoint external consultants to assist with the competitive process which will be formally announced in June or July.
In 2010 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.
