I move: "That the Bill be now read a Second Time".
The purpose of this Bill is to give effect to the Government's undertaking to establish a national lottery first set out in their White PaperBuilding on Reality in October 1984.
The establishment in Ireland of a national lottery is not, in international terms, a very unusual step. State lotteries exist today in over 80 countries with widely different economic, cultural and religious characteristics. Countries as varied in political and economic terms as the United States, Australia, Sweden, Ghana, New Zealand, Brazil and China all have successful State lotteries. Among our partners in the European Communities, State or national lotteries are established in the Federal Republic of Germany, France, Belgium, the Netherlands, Luxembourg, Denmark, Spain and Portugal. Britain of course has its football pools.
Lotteries were first established in the fifteenth century in the Flanders cities of Ghent, Utrecht and Bruges, followed in the sixteenth century by lotteries in Genoa and other Italian cities and in France. America's involvement with lotteries dates from the earliest colonial period. The American Revolution was funded in part by a lottery begun in 1776 to support the colonial army and, in the 50 years before the civil war, many universities, including Yale, Princeton and Harvard, were aided by lotteries. The resurgence in lotteries in the United States began in 1964 with the establishment of the New Hampshire State Lottery. At present some 22 States of the Union, including New York, New Jersey, Maryland and the District of Columbia, operate State lotteries.
The function of the lottery will be to generate surplus funds that will benefit our community in a number of ways, without the need for recourse to taxation or other compulsory revenue raising measures. Its surplus will be generated through the purchase of tickets by those who wish of their own accord to participate in the national lottery, and not through any increase in the tax burden. In the other countries I have mentioned, lottery proceeds are applied to a variety of purposes including sport, health care, the arts and other cultural activities. State lotteries are therefore a widespread and advantageous phenomenon. The countries I have mentioned are not less sensible than ourselves and would not operate official lotteries were they not profitable, socially useful and popular.
As the Government have already announced, the lottery's surplus will be spent on sport and recreational facilities, national culture including the Irish language, the arts and health. I would like to draw the attention of the House also to other benefits which will accrue through the operation of the lottery. There will be, in the medium term, the creation of between 40 and 50 jobs in the national lottery company itself, with further spin-off benefits in increased business activity for the national lottery's suppliers and the sales commission which will be payable to ticket sales agents.
Since, also, it is envisaged that at least 40 per cent of the lottery's gross receipts will be returned in prize moneys, it is reasonable to take account of the benefits the lottery will confer in varying degrees on the future prize winners.
Before I come to the Bill itself I would like to outline the considerations which determined the general thrust and shape of the legislation. Public trust and confidence is of crucial importance in the operation of State lotteries. Such trust can only be secured and held by comprehensive legislative provision which demonstrably protects the public interest and guards the integrity of a national lottery on behalf of the prospective participants. It is accordingly appropriate that the legislation should provide for the award by the Minister for Finance of a licence to operate the national lottery to a body in which he can be satisfied that the public interest can be safeguarded. The legislation is of course presented in general terms to award the licence to an appropriate body. It would clearly not be appropriate to prescribe the body to be awarded the licence in the Act. This would be unduly restrictive. As the House is aware, after due consideration of the matter the Government decided to award a licence to operate the national lottery to a subsidiary of An Post, which I believe is admirably equipped in terms of its resources, commitment, and marketing acumen to discharge this new function.
I wish now to turn to the question of the impact of the national lottery on those existing lotteries operated by voluntary and charitable organisations. The Government when announcing the national lottery indicated that consideration would be given to measures, including changes in the existing legislation governing prizes, designed to ensure that the activities of existing lotteries could continue. The Minister for Finance, in his budget speech of 29 January 1986, reiterated that the Government's intention to ensure that the good work funded by existing charitable and other voluntary lotteries which operate nationally does not suffer as a result of the national lottery.
Extensive discussions have taken place with those voluntary organisations, charities or umbrella groups that had earlier expressed disquiet at the possible adverse effects of the national lottery. Provisions have been included in the Bill to protect and enhance the position of existing charitable and voluntary lotteries.
I would now like to outline the provisions of the Bill in the light of what I have said about the Government's approach to this legislation. Section I defines the terms used in the Bill; "national lottery" is defined as any lottery game or combination of games held by the Minister, or under licence on his behalf, in accordance with rules contained in a scheme approved by the Minister under section 29. Section 2 enables the Minister to hold or procure the holding of the national lottery. Section 3 sets out the mode of procurement. The Minister may grant a licence to any legal person authorising the holding of the national lottery on his behalf. The Minister may attach terms and conditions to the licence and may amend such terms and conditions. The licence which can be revoked at any time by the Minister, must be expressed to authorise a company within the meaning of the Companies Acts to hold the national lottery on the Minister's behalf. The company so authorised may itself be the licensee or a subsidiary of the licensee. Moreover, section 10 provides that the sole objects of the authorised company must be the holding of the national lottery pursuant to the licence granted and "the doing of all other things as are incidental or conducive to the holding of the lottery". These provisions mean that, whoever gets the licence, the lottery will be operated by a company established for no other purpose and to which the relevant regulatory and other provisions of this Bill can apply without fear of ambiguity or unclear division of responsibility or obligation. In the event, as I have already stated, the Government intend that a subsidiary of An Post will receive the licence and will itself be the authorised company within the terms of the licence.
Section 4 provides that the total value of the prizes to be distributed by the national lottery must not be less than 40 per cent of the total amount received in respect of national lottery ticket sales in any financial year of the authorised company. The number, form and value of prizes are to be determined by the company. Section 5 provides that the surplus accruing to the Exchequer from the operation of the national lottery will be applied to such general purposes as the Government may determine from time to time. Whenever such a purpose is determined, notice must be published inIris Oifigiúil.
As I have said already, the Government have decided that the surplus of the lottery is to be applied to the benefit of sport and recreational facilities, national culture including the Irish language, the arts and health. These will be the first purposes under this section to be listed inIris Oifigiúil. It would be possible to specify such purposes in the Bill but the Government consider that this approach lacks flexibility; for example, the provision of national lottery resources to some area not included in the list I have just mentioned would have to await amending legislation.
It is intended that, when the national lottery is operational, specific allocations to bodies or organisations in these areas will be decided on by the Government and made available through the normal Estimates process, in separately identifiable subheads. For example, a body in the area of sport which wanted to be considered for funding from the lottery would state its case to the responsible Government Department, the Department of Education in this instance, when this Bill is enacted. Similarly other bodies in the areas of national culture, the arts or health would state a similar case to the relevant Department. All such requests will be evaluated against estimates of the lottery's proceeds in each year, and the appropriate provision made in the Votes concerned.
There will have to be safeguards in these procedures against over-expenditure since, in the early years of the lottery, it will be difficult to form an accurate prediction of the lottery's net proceeds. It will be the Government's intention to devote all of the net proceeds of the lottery to the purposes indicated. The process of distribution cannot, however, begin until there are proceeds to distribute; there will, of course, be no proceeds until this Bill is enacted and the lottery licence awarded. I have not here referred to the allocation of any of the lottery's proceeds to charitable or voluntary bodies whose own lotteries may be adversely affected by the operation of the national lottery. I will deal with this question later in the context of the amendments contained in the Bill to the Gaming and Lotteries Act, 1956.
Section 6 provides for the appointment by the Minister of an independent scrutineer who will examine on the Minister's behalf the operation of the national lottery in order to ensure its integrity and to guard against fraud. The scrutineer is not intended as a substitute for or aide to the auditor who will in the normal course under the Companies Acts audit the balance sheet and accounts of the authorised company. His function will be to act as the Minister's and the community's watchdog over the operation of the national lottery to ensure its correct and proper functioning.
Section 7 provides for the appointment by the authorised company of ticket sales agents on such terms as the company may determine with the consent of the Minister. Lottery tickets may be sold only by the company or by their sales agents and not be sold to anyone under the age of 18 years. The purchase of tickets on behalf of those under 18 years, for example as presents, is not, however, to be prohibited. Section 7 also makes it an offence for certain categories of person, for example, directors or employees of the authorised company, to own a national lottery ticket.
Section 8 provides for the establishment under the Minister's management and control of a national lottery fund at the Central Bank. All lottery receipts, with the exception of sales agents' commission and any "instant" prizes payable in any lottery game at point of sale, will be paid into the fund from which the authorised company's remuneration and operating expenses will be paid. Prize moneys will also be paid periodicallyen bloc from the fund to the company for distribution. Surplus moneys in the fund are to be remitted at least annually to the Central Fund.
Section 9 provides for payment of remuneration due to the licensee from the fund. Sections 11 and 12 provide that the memorandum and articles of association of the authorised company must be consistent with the Act and subject to the approval of the Minister. Section 13 provides that the Minister's prior approval to any change in the authorised company's memorandum or articles of association must be obtained by the company.
Section 14 provides that the number of directors of the authorised company shall be seven including the chairman and sets out their mode of appointment. The Government envisage that An Post will in the terms of this section nominate four of the seven directors of An Post's subsidiary, including the chairman, with the consent of the Minister, who will nominate the remaining three directors.
Section 15 provides for the remuneration and other terms and conditions of service of the staff of the authorised company.
Section 16 provides that, where a director of the authorised company is nominated as a member of Seanad Éireann or is elected to either of the Houses of the Oireachtas or to the Assembly of the European Communities, he shall thereupon cease to be a director of the company. Where a member of the staff of the company is so nominated or elected he shall stand seconded from employment by the company.
A person entitled to sit in either House of the Oireachtas or who is a member of the Assembly of the European Communities is disqualified from becoming a member of the staff of the company. This is a standard provision.
Section 17 enables the authorised company to borrow money with the consent of the Minister. Section 18 provides that, where the authorised company acquires an interest in any property funded in whole or in part from the proceeds of the national lottery, they shall hold such property in trust for the State and must surrender that interest to the Minister or to another specified State agency, if the Minister so requests or if the licence under which the company hold the national lottery expires or is revoked.
Section 19 provides for the keeping of accounts by the authorised company, and for the laying of the company's accounts and the directors' report to the shareholders before each House of the Oireachtas. Section 20 provides for the submission to the Minister by the authorised company of a report on their activities during the year. This report will be complementary to the accounts and other documentation provided for in section 19. Section 21 enables the Minister to take up or purchase shares in the authorised company, subject to a maximum of 20 per cent of the total nominal value of the issued shares of the company.
Section 22 authorises the Minister to sell or otherwise dispose of any shares in the company vested in him. Section 23 enables the Minister to exercise all rights and powers exercisable in relation to any shares held by him. Section 24 provides that any shares in the authorised company held by or in trust for any other person shall not be disposed of without the consent of the Minister.
Section 25 provides that an issue of shares of the authorised company shall not be made without the Minister's approval. Section 26 provides that all dividends and other moneys received by the Minister in respect of the authorised company shall be paid into or disposed of for the benefit of the Exchequer.
Section 27 provides that every director of the authorised company, other than such directors as may be agreed on between the Minister and the licensee, shall hold his shares in trust for the Minister. Provision is also made for the transfer of one or more shares to a person appointed, or about to be appointed, a director of the company. Section 28 deals with the vesting in the Minister of certain shares held by directors or shareholders upon retirement or death.
Section 29 provides that a scheme of rules in respect of each lottery game in the national lottery must be prepared by the authorised company for approval by the Minister. Only those games in respect of which such a scheme has been provided by the company and approved by the Minister can be operated by the company.
Section 30 enables the Minister to issue such directions as he considers necessary or expedient in the public interest to the authorised company. Section 31 enables the Minister to require any shareholder in the authorised company to assign his shares to the Minister or to another specified person where the Minister revokes the licence under which the company were authorised to hold the national lottery. It also provides for the appointment by the Minister if he so thinks fit at any time of a manager who would, in terms of the section, take over the management of the authorised company as a going concern.
Section 32 confines the use of the names "national lottery" or "Irish National Lottery" to the Minister, the licensee, the authorised company or a person so authorised by any of these. A person who uses these terms unlawfully will be guilty of an offence. Section 33 exempts the national lottery from the provisions of the Gaming and Lotteries Acts, 1956 to 1979.
Section 34 authorises the Minister for Justice to amend by regulations sections 27 and 28 of the Gaming and Lotteries Act, 1956, by altering the prize limits specified in subsections (2) (b) and (4) of section 27 and subsection (2) (c) of section 28 of that Act. Lotteries held pursuant to sections 27 and 28 are also exempted from the provisions of section 22 of the Gaming and Lotteries Act, 1956, in relation to advertising. I shall return to this provision in a moment.
Section 35 enables the Minister to make regulations to give full effect to the provisions of the Bill or, for a period of two years after its enactment, regulations to do anything which appears to him to be expedient for bringing the Bill's provisions into operation, including the modification of any such provisions. Sections 36 and 37 are standard provisions dealing with, respectively, the expenses of the Minister and the Bill's short title and citation.
As Deputies will be aware, the Gaming and Lotteries Act, 1956, imposes prize limits of £300 or £500 on lotteries operated under permit from the Garda Síochána or under licence from the District Court. Section 34 of the National Lottery Bill provides that these prize limits may be amended by regulation by the Minister for Justice. It is the intention that the prize limits in question will be amended upwards at least to reflect changed purchasing power since 1956. The Government recognise the need to introduce these changes not later than the start-up of the national lottery and accordingly the effective date of such an amendment will be not later than the start-up date for the national lottery. The purpose of this is to enable lotteries under Garda permit or District Court licence to compete on a reasonable footing with the national lottery and thereby to ensure the continuation of this form of fund raising for voluntary and charitable organisations.
Section 34 of the Bill also provides that the prohibition of advertising contained in section 22 of the Gaming and Lotteries Act, 1956, will not apply to lotteries operated under Garda permit or District Court licence. The Government accept that, even with increased prize limits, the continuation of this restriction on the types of lotteries I have mentioned would be unduly onerous in circumstances where the national lottery, with its attendant publicity, was operational.
The Government believe that these measures will enable the lotteries in question to operate successfully after the start of the national lottery. It is not, of course, the Government's intention that the national lottery should supplant or replace the present fund raising activities of voluntary and charitable bodies. The loyalty of subscribers and participants in existing permitted or licensed lotteries will ensure that these are still a substantial source of funding for the voluntary and charitable organisations concerned. I believe that the start of the national lottery will in no way diminish this loyalty, which is rooted in a deep appreciation of the excellent work which charitable and voluntary bodies undertake in our community.
In the event that, despite these measures, it can be shown that the net income to charitable and voluntary bodies from the lotteries they operate has declined as a direct consequence of the activities of the national lottery, I can assure the House that the Government will be sympathetic to their situation in deciding on the allocation of the national lottery's proceeds.
I would like to conclude by reiterating that the national lottery will be a means to an end, not an end in itself, and that its ultimate purpose is to provide funding in support of very desirable social and cultural activities. I therefore commend the Bill to the House.