national lotteries board portfolio committee briefing october 2004
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Vision/Mission
To be a world class regulator and distributor of lottery funds
To ensure that that the national and other lotteries are run with the utmost integrity, that the interests of all players are protected, that the national lottery generates maximum revenues for good causes in a responsible way and that these revenues are disbursed expeditiously
VISION
MISSION
National Lotteries Board
NoraFakude-Nkuna
ShelleyThomas
AstridLudin
HenryMakgothi
NornanAxten
GeorgeNegota
Joseph Foster
The National Lotteries Act
• Establishes the National Lotteries Board• Sets up the process for awarding the licence• Establishes the National Lottery
Distribution Trust Fund (NLDTF)• Sets up the process of Distribution • Sets up process for Monitoring &
Regulating– Private & Society Lotteries– Promotional Competitions
Functions/Objectives
• Advise the Minister – on the issuing of Licence/s
– on the percentages allocated to good causes
– on the efficacy of Legislation related to Lotteries
• Protection of Players• Maximize proceeds to good causes• Administer NLDTF• Monitor & Regulate Other Lotteries• Manage the Central Applications Office
Uthingo
NLB
NLDTF
DACharities
DAArt & Culture
DASport
DARDP
DAMisc
22%36
%
22%
5%15%
Weekly transfer
CentralApplications
Office
REGULATORMonitors activities& approves games
NGOsCBOsApplications
Allocation and distribution of funds (average turnaround time is 3 months)
Structure
Operates the National Lottery
NATIONAL LOTTERIES BOARD
F a c to tum
P A In te rn a l A u d it
C o m pu tingO ffice r
F in a nce O ffice r
C F O
P A
H R M
C o m plia n ceO ffice r
L eg a l C o m m u n ica tio ns
P A M a ilro omA s s is ta n t
A s s is ta n t IT S up p o rt
G ra n t O ff ic e rs
C o o rd in a to r
G ra n t O ff ic e rs
C o o rd in a to r
G ra n t O ff ic e rs
C o o rd in a to r D C A ss is ta n ts
C h a rit iesM a na g er
G ra n t O ff ic e rs D C A ss is ta n ts
C o o rd in a to rS p o rts
G ra n t O ff ic e rs D C A ss is ta n ts
C o o rd in a to rA rts
C A O M a n a g er
C E O
NLB Balance Sheet as at 31 March 2004ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
Current Assets
Trade and other receivables
Investments
Cash and cash equivalents
Total assets
EQUITY AND LIABILITIES
Reserves: Retained earnings
Non-current liabilities
Deferred income: Licence fees
Current liabilities
Accounts payable
Provisions
NLDTF assistance
Total equity and liabilities
2004
717 984
18 900
736 884
519 397
125 706 467
202 942
126 428 806
127 165 690
-
227 848
126 425 276
512 566
-
126 937 842
127 165 690
2003
1 172 653
162 737
1 335 390
27 833 865
87 118 136
6 239 599
121 191 600
122 526 990
4 600 495
455 697
115 728 105
222 252
1 520 441
117 470 798
122 526 990
Revenue
Operating costs
Operating deficit before finance costs
Finance costs
Operating deficit
Investment income
Deficit for the year
8 920 505
(13 756 980)
(4 836 475)
(766)
(4 837 241)
236 746
(4 600 495)
11 055 404
(11 869 166)
(813 762)
(3 101)
(816 863)
816 863
-
2004 2003
NLB Income Statement for the year ended 31 March 2004
ASSETS
Current Assets
Accounts receivable
Investments
Cash and cash equivalents
Total assets
EQUITY AND LIABILITIES
Capital and reserves
Retained earnings
Current liabilities
Trade and other payables
Total equity and liabilities
2004
14 385 997
1 807 390 581
1 057 630 675
2 879 407 253
1 693 676 398
1 185 730 855
2 879 407 253
2003
37 053 974
1 461 370 978
708 404 915
2 206 829 867
1 653 310 881
553 518 986
2 206 829 867
NLDTF Balance Sheet as at 31 March 2004
Revenue
Finance income
Other income
Disbursement of funds
Assistance to the National Lotteries Board
Other operating expenses
Net surplus for the year
986 642 353
301 937 520
4 690 000
1 293 269 873
(1 244 844 629)
(8 045 328)
(14 399)
(1 252 904 356)
40 365 517
1 009 421 136
219 133 320
20 958 739
1 249 513 195
(734 452 855)
(11 400 000)
(13 717)
(745 866 572
503 646 623
NLDTF Income Statement for the year ended 31 March 2004
2004 2003
Budget
2004/2005 2005/2006 2006/2007
Income 265 270 50
Grant 24,544 25,924 28,037
Expenditure 20,738
Activities
• Regulation– National Lottery– Other Lotteries & Promotional Competitions
• Distribution of NLDTF
Uthingo
NLB
NLDTF
DACharities
DAArt & Culture
DASport
DARDP
DAMisc
22%36
%
22%
5%15%
Weekly transfer
CentralApplications
Office
REGULATORMonitors activities& approves games
NGOsCBOsApplications
Allocation and distribution of funds (average turnaround time is 3 months)
Structure
Operates the National Lottery
Regulating the National Lottery
• Retail Outlets• Payments to the NLDTF• Copyright and Trademarks• Player Relations• Advertising• Security• Systems• Banking and Record Keeping• Payment Security• Ancillary Activities• Directors, Shareholders and Subcontractors• Social Responsibility
Salient Lottery facts for the year ended 31 March 2004
Prize Winners
Millionaires
Rollovers
Highest Jackpot
Highest Prize
Average Number of Players Per Week
Total LOTTO Sales (incl. VAT)
Highest Weekly LOTTO sales
Total Prizes Paid
Total Contribution to NLDTF
43 033 473
89
24
R30 Million
R30 Million
4,1m
R4 094 300 637
R101 031 555
R2 026 713 820
R986 642 353
Eastern Cape7% Free State
5%
Gauteng39%
Kw aZulu Natal14%
Mpumalanga6%
North West6%
Northern Cape2%
Limpopo5%
Western Cape16%
Ticket Sales Per Province (Rm)
Uthingo
NLB
NLDTF
DACharities
DAArt & Culture
DASport
DARDP
DAMisc
22%36
%
22%
5%15%
Weekly transfer
CentralApplications
Office
REGULATORMonitors activities& approves games
NGOsCBOsApplications
Allocation and distribution of funds (average turnaround time is 3 months)
Structure
Operates the National Lottery
Charities Focus
• Capacity Building
• Poverty Alleviation
• Community and Residential Programmes for – children
– youth
– women
– the aged
– persons with disabilities
– people affected by / infected with HIV/AIDS
– the terminally ill
– drug abusers
Charities Activity
YearEndingMarch
No. of Applications
received
No. of Applications
Approved
No. of Applications
Rejected
Pending
2002 2255 849 1406 -
2003 4063 1357 2670 36
2004 3925 856 2302 767
Arts, Culture & Heritage Focus
• Major Projects of National Significance
• Rural Grants for projects designed to serve the community
• Creative Development Grants
• Festivals
• Film Production and Distribution
• Public Art
• Heritage: Architectural, Archaeological, Historical and Indigenous Knowledge Systems.
• Environment
Arts, Culture & Heritage Activity
YearEndingMarch
No. of Applications
received
No. of Applications
Approved
No. of Applications
Rejected
Pending
2002 746 149 597 -
2003 1398 283 1097 18
2004 1838 680 48 1012
Sports Focus
• Capacity building for sports people, managers, administrators and coaches.
• Equipment and kit for teams and clubs.
• Upgrading of existing sporting facilities.
Sports Activity
YearEnding March
No. of Applications
received
No. of Applications
Approved
No. of Applications
Rejected
Pending
2002 535 247 288 -
2003 1016 408 606 2
2004 1457 209 194 1054
NLDTF DisbursementsActual Cash Paid 31 March 2004 (Mil)
2001 2002 2003 2004 Total
Charities 0 69.5 174.5 302.7 546.7
Arts 0 25.4 40.1 135.2 200.8
Sport 0 21.6 62.5 149.2 233.5
Miscellaneous 4.1 0 9.6 17.4 31.1
Total 4.1 116.5 286.8 604.6 1012.2
NLDTF CommitmentsGrants made but not paid (Mil)
Charities 483
Arts 386.6
Sport 261.4
Miscellaneous 0
Total 1131
30.6 % Abstained from buying any
tickets
12.6 % Bought scratch cards
69.1%Bought lotto tickets
Participation
33,3 % were not interested (10,2 % of
total population)
27,6 % experienced a lack of money (8,4 % of
total population)
1,0 % had no access to retail outlets (0,3 % of
total population)
9,9 % do not gamble at all (3,0 % of total
population)
18,0 % advanced religious beliefs (5,5 %
of total population)
Reasons for NOT Participating
8,1 % find it unacceptable
11,0 % do not approve of lottery games personally
but have no objections to
participation by others
80,9 % find it acceptable
Acceptability
30,1 % buy lotto tickets once a week
6,3 % buy lotto tickets once every
two weeks
4,2 % buy lotto tickets less often
6,0 % buy lotto tickets once a
month
53,4 % buy lotto tickets twice a week
Buying Frequency (Lotto)
6,9 % buy scratch cards every day
35,4 % buy scratch cards every week
(once or more)
16,0 % buy scratch cards once every
two weeks
20,1 % buy scratch cards once a month
21,6 % buy scratch cards less often
Buying Frequency (Instants)
30,0 % would pay off a debt/bond
40,4 % would save it
40,9 % would purchase items for basic needs
22,5 % would purchase luxury
items
9,3 % would spend it on
entertainment
7,0 % would spend it on gambling or
buying lottery tickets
Allocation of Winnings
3,2 % spent R151 – R300
16,2 % spent R51 – R150
0,9 % spent R301 – R500
32,9 % spent R21 – R50 0,1 % spent R500 to
R1 000
46,7 % spent less than R20
Expenditure on Lottery
2,4 % spent more than R300
8,9 % spent R51 – R150
29,3 % spent R21 – R50
59,4 % spent less than R20
Expenditure on Instants
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
Only a third (33,3 %) of allrespondents made provision intheir budgets for buying lotto
tickets and scratch cards
Those that did not budget (66,7%) confirmed their impulsive
buying behaviour
Household Budget Behaviour
Impact of Big Jackpots
10.7%
89.3%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
Only one in every ten respondents (10,7 %) reported that lotto
tickets are procured only if big jackpots are at stake
Nine in every ten (89,3 %) are more regular buyers and are not
particularly motivated to buy tickets with big jackpots
Extra Spend on Big Jackpots
1.8
3.6
10.3
67.3
17.0
0 10 20 30 40 50 60 70
Percentage
Five times more
Four times more
Three times more
Twice as much
More but less than twiceas much
8,6 % from other items10,8 % from luxury
items
63,6 % from household
necessities
22,9 % from savings
11,0 % from other entertainment
Expenditure Displacement
Extent of Problem Gambling
• Used Gamblers Anonymous 20 Questions
• 1.2% of all Lottery Players exhibit potential
• 0.8% of the Population
• NCSG (2001) study shows 1.74%
• less than 0,5 % of household expenditure is allocated to lottery
Lottery games: 0.42%
Casinos: 0.91%
Horse/sports betting: 0.20%
Propensity to GambleLottery vs Other Modes
THE CHANCE OF DRAWING THE COMBINATION 1 2 3 4 5 6:
36.5
36.5
27.0
0 10 20 30 40
Percentage
Worse
The same
Better than the chance of draw ing 13 39 23 711 42
CHANCES OF GETTING 4 NUMBERS RIGHT IN THE NEXT DRAW IS:
66.2
33.8
0 10 20 30 40 50 60 70
Percentage
The same as alw ays
Better if you got 3 numbers right in the lastdraw and 2 numbers right in the previous draw
STRENGTHS WEAKNESSES
OPPORTUNITIES THREATS
Low Cost High IntegrityHighly Skilled StaffResponsible PlayRestricted Market
Statutory ImpedimentsPublic RelationsIsolationLow Throughput
Throughput/ServiceNew Models of FundingAccessibilityPublic RelationsCollaboration
Illegal Lotteries/CompetitionsMoney Laundering/SyndicatesExcessive Play
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