Overview of Operations of the National Lottery: Discussion

I welcome Ms Tara Buckley, director general of RGDATA. I remind members and witnesses to please turn off their mobile phones as they interfere with the sound transmission quality.

I advise witnesses that, by virtue of section 17(2)(l) of the Defamation Act 2009, they are protected by absolute privilege in respect of their evidence to this committee. If they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to qualified privilege in respect of their evidence. Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given. They are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or persons or entity by name or in such a way as to make him, her or it identifiable.

I invite Ms Buckley to make her opening statement.

Ms Tara Buckley

Thank you very much, Chairman. I thank the committee for the invitation to discuss the overview of the operations of the national lottery. The national lottery is an area of huge importance to the retail agents I represent. It is also a key issue for this House as the national lottery is different from ordinary gaming in that it is operated under a State licence and was established to generate money for good causes.

The independent community retailers that RGDATA represent have played a key role in the success of the national lottery since it was first launched in 1988. We certainly believe that our model of responsible retailing in the community assisted the national lottery to establish itself and develop into a well-regarded institution that attracted a significant price tag when the Government put a 20-year licence to operate the national lottery up for sale.

In general, our members' relations with Premier Lotteries Ireland, PLI, the new operators of the national lottery, have been positive and constructive. While there were some initial transitional issues as PLI took over the national lottery franchise, thankfully the sort of technical issues which led to outages and the cancellation of a national lottery draw in 2015 have diminished. PLI has also shown itself to be proactive in managing its relations with the national lottery agents and we welcome that.

As can be expected, PLI, as a commercial company that made a significant investment in the national lottery, will take whatever steps are necessary to build and grow its business in Ireland. Retailers welcome any effort to increase the retail sale of national lottery products, the prizes and the money raised for good causes and will continue to be responsible retailers within their local communities. PLI can be expected to maximise the opportunities to grow its business operations here and to secure a return on the €405 million it paid for the 20-year operating licence for the national lottery. This is a fair and legitimate aspiration on its part, which should yield greater sales, more prizes and greater returns to good causes. Of course PLI will do what it can to get a return on its business investment. As the company itself states, "PLI's mission is to operate a world class lottery for the people of Ireland, raising important funds for good causes, on behalf of the Irish Government".

It was recognised at the time of the sale that it would be important to have an independent body overseeing the operation of the national lottery, protecting players' interests, the common good and ensuring the lottery was run in accordance with the licence. Hence, the new licensing structure for the national lottery also saw the establishment of the first national lottery regulator in Ireland in 2014. While the new regulator has needed time to establish and to start to build up expertise and knowledge we think that three years down the road the committee should review the role and function of the national lottery regulator.

From an RGDATA perspective and as significant stakeholders, there are some specific areas where we believe the national lottery regulator needs to become more public, find its voice and make its priorities and activities better known to the wider public. I am not sure what the experience of this committee has been but, to date, RGDATA has heard very little from the regulator since the office was established and we would encourage a more open and active profile for this important role.

Let me give some examples of how the national lottery regulator plays a pivotal role. The first area relates to technical issues. In 2015 there was a significant technical issue concerning the national lottery which led to a draw being postponed for the first time in the history of the national lottery. There were also some additional technical outages and incidents since then. The technical integrity of the national lottery is of primary importance for players and retailers. To date, no independent and authoritative explanation has been provided for the outages. Retailers believe the regulator should be active in securing explanations for when the system fails and providing stakeholders with details of the problems and the measures taken to ensure they do not recur.

It is also important that the regulator regularly audits the technical performance of the national lottery and reports this information fully. The growth in online gaming is another area where we believe the regulator needs to step up to the plate and demonstrate that the office is protecting the interests of players, the national lottery and the broader community. At present there are 21 different instant games that can be played online on the national lottery website in addition to the national lottery and EuroMillions draws. Players registered with the national lottery online are subject to spending limits of €75 per day, €300 per week and €900 per month. While most of the online games are replicas of the instant win or draws available in retail outlets, there are two that are entirely new and present an exclusive online playing opportunity, namely, Instant Lotto and Mini Keno. The online games can be played on mobile devices any time, any place and anywhere so they raise issues for those disposed to gaming addiction that are less likely to arise in a traditional retail agent transaction.

The national lottery regulator should outline the measures that have been taken to protect vulnerable players and to replicate the types of controls on purchases in traditional shops. It would also be helpful to get some data from the regulator on the profile and patterns of online purchases of national lottery products. The impact of the rapid roll-out of online lottery products must be assessed independently and objectively.

We would also like to know if the national lottery regulator is monitoring the huge growth in online lotto sites with no links to the actual licensed national lotteries.

They offer punters the opportunity to gamble on the results of lotteries all around the world.

These sites have no obligations to contribute towards good causes. All one has to do is google "Play Lotto Online" and one will get 16.5 million hits in less than one third of a second. This has huge implications for how people play national lotteries and I make no bones about the fact that they are a huge threat to the retail agents I represent who are selling legitimate tickets that deliver funds to good causes. The UK has proposed new legislation to make it a requirement for any gambling site wishing to advertise its services within the UK and accept UK customers to hold a licence issued directly by the UK Gambling Commission rather than the current position whereby the sites can operate with licences issued by a white-listed gambling jurisdiction. RGDATA respectfully suggests that the committee should investigate if we should do something similar here.

The growth in agents is another area I would like to touch on. The national lottery intends to create a national lottery everywhere model, which will increase the opportunities for the public to buy lottery tickets in a host of new outlets and at new opportunities. This will be achieved in part through deals with online payment services operators that have configured their devices to print out lottery tickets. This will lead to a rapid explosion in the availability of the national lottery - a national lottery everywhere model with the lotto potentially being available in bookshops, cafes, restaurants, barbers - basically any outlet that has a point of sale terminal. Has the regulator assessed the impact of such an extension of the availability of the national lottery? How has he equated it with the licence condition for the operator of the lottery not to apply different commission structures to retail agents?

I refer to the national lottery and licensed premises. It was a condition of the national lottery licence that no agents would be appointed in licensed premises where alcohol is sold for consumption on the premises. This recognises two issues. The national lottery is different to ordinary gaming; it is operated under a State licence and aims to generate money for good causes. It also recognises the risk of associating gaming with alcohol. The irony is that the growth in online national lottery activity has effectively rendered the prohibition on sales of tickets in licensed outlets to be a fiction. Players can now log onto their phones and play any one of 21 instant games in the pub subject only to the daily spending limit. Has the regulator a view on this issue? What research has his office carried out on the patterns of use and implications of such gaming?

It is important that the national lottery regulator increases its public profile and engagement with stakeholders in respect of the important role that the Oireachtas has conferred on it. The regulator needs to demonstrate effectiveness in promoting the protection of the public interest in its operations and formal engagement by the regulator with the committee will be a key part of providing clarity on the regulator’s role and function. Ideally, the regulator should use its website and other media fora to provide details of reports on any technical outages involving the national lottery; measures taken by it to protect player interests; the extent to which it has approved or rejected new games submitted by approval by PLI; the research that it has undertaken on gaming patterns and habits in Ireland and how these feed into the regulatory function; the types of approvals sought for new agents to be appointed; details of any gaps in the regulatory protection for the public necessitated since the agency was set up; details of how it expends resources; and details of consumer complaints made and resolved concerning the national lottery.

RGDATA fully accepts that the regulator has a new brief and seems not to have had a significant level of expertise within his office from people formerly involved in regulating lotteries. There has, therefore, been a steep learning curve. At the same time, PLI has ramped up considerably its expansion of the national lottery and its plans to become a €1 billion business and it is important that all stakeholders, including the public and retail agents, are confident that an active regulator is on the job. I thank the committee and I am happy to take any questions.

Has RGDATA had direct engagement with the regulator?

Ms Tara Buckley

When the regulator was appointed, we met him and we attended a previous meeting of the committee at which he was also present. I met the regulator subsequent to his appointment.

Was there further engagement following that meeting?

Ms Tara Buckley

No. We understood when the outages happened in 2015 that there would be a report but we never received one.

Ms Buckley listed a number of measures the regulator should take in her closing remarks, including reports on technical outages and so on. Is she saying that none of that information is available or communicated to stakeholders?

Ms Tara Buckley

Not that we are aware of.

I thank Ms Buckley for attending. She said the regulator should replicate the types of controls on purchases in traditional shops. Will she outline those controls? Is a protocol in place?

Ms Tara Buckley

There are age restrictions on the sale of national lottery products as these are face-to-face transactions. People have to go into the shop to purchase the ticket.

Is there a limit?

Ms Tara Buckley

The shops I represent feel strongly they were part of building the national lottery brand. They felt it was a responsible brand and they were engaged with it. They felt it was good because it provided money for good causes. The retail agents and the national lottery built a good brand together, which was worth a great deal of money when the Government went to sell the licence.

But if I go into one of the shops RGDATA represents and ask for 100 lotto tickets, is there a limit on the number that can be sold? Is there a protocol in place to warn me of the dangers of gambling or is it the case that if I want to buy 1,000 tickets, I can?

Ms Tara Buckley

I am not sure if there is a limit. There is an age restriction but I am not aware of somebody buying 1,000 tickets.

What is the age limit?

Ms Tara Buckley

It is 18 years of age. We remind our members of their obligations relating to age restricted products.

Does RGDATA use mystery shoppers in the way other agencies use them to monitor alcohol and tobacco sales? Has somebody under age tried to buy lotto tickets? Have people been convicted of selling to people under age?

Ms Tara Buckley

We are not aware of that. We do not do mystery shoppers for our members; we just provide information and advice.

I acknowledge RGDATA does not but the organisation represents various shop owners who may have encountered a brush with the law because somebody came in who looked like he or she was aged 23 but was only 17. Is Ms Buckley aware of anybody testing the system to see if people are buying tickets under age?

Ms Tara Buckley

No. There is no formal structure to do that.

State agencies send staff into shops to ensure compliance with age restrictions on the sale of cigarettes. Is Ms Buckley aware of anybody doing the same for lottery ticket sales?

Ms Tara Buckley

Not that I am aware of.

Ms Buckley said the new operator should report on the technical outages and the online environment avoids many of the controls in the shops but also reduces the margin RGDATA members make from selling these products.

Ms Tara Buckley

That is a concern. People may think they are buying lottery tickets but they are buying from online platforms that have no association with the national lottery and, therefore, none of their money is going towards good causes.

I accept that but Ms Buckley said RGDATA's members have a difficulty with the national lottery, which is raising money for good causes, doing that online and taking away customers who might have historically bought scratch cards in shops as an impulse purchase when buying the paper, cigarettes and so on. They might now use the app on their phone to play these games in the pub or at home and RGDATA members are not generating whatever margin is available to them from those tickets.

Ms Tara Buckley

I will represent the interests of my members.

Of course, and I expect Ms Buckley to.

Ms Tara Buckley

We are concerned that games are available online that are not available in retail outlets. We would like all products to be available in all outlets in order that we would be able to sell the same products that are available online.

One of the gripes is there are games available online that are not available in scratch card format. Is it just two games that are not available?

Ms Tara Buckley

At the moment.

There are 21 games and 19 are available via scratch card.

Ms Tara Buckley

That is the combination of the various lottery games, the EuroMillions and scratch games.

Ms Buckley referred to 21 instant games. I presume they are games where players win immediately as opposed to waiting for the lotto draw on Wednesdays and Saturdays.

Ms Tara Buckley

Yes.

So 19 of the 21 games are available in both formats and two are only available on the app. The app has a high spending limits at €75 per day, €300 per week and €900 per month. Is Ms Buckley concerned that they are this high?

Ms Tara Buckley

We believe we played our part in building a well-respected brand and we are concerned that things are happening that might damage it. Our concern is there is activity taking place which is straying away from the original intent of the national lottery.

Our concern would be that nobody is monitoring, assessing or delivering reports on the impact of the changes.

There is concern about the growth in agents. There are a certain number of people who will spend a certain amount of money and that would be diluted across more outlets. I presume not all members have lotto terminals. Of those that do, I presume that while most would like to be the only show in town, the more agents there are, the less they will receive. Is it the view of Ms Buckley that bookshops, cafes, restaurants and barber shops are not suitable places for lotto tickets to be sold?

Ms Tara Buckley

Our concern is that different types of agents are being created. We fought very hard to retain the retail agents' margin. The Minister and the House made sure that the retail agents' margin was protected. We would be concerned that they are creating other types of agents which do not receive the same margin. It is, therefore, in their interests to push business to the other type of agents who do not receive the same margin. It is a business matter.

What is the current margin?

Ms Tara Buckley

It is 6%.

Has it always been 6% or has it fallen over time?

Ms Tara Buckley

We fought very hard to make sure it would not fall, and it did not.

It has been 6% since 1986 or 1987, when the lotto was established.

Ms Tara Buckley

That is my understanding. If the margin had not been protected, I can assure the Senator it would have been the first thing they would have gone after having paid €405 million for the licence.

The current operators receive 6%, but there is no guarantee for new operators.

Ms Tara Buckley

We are not clear about the exact nature of the commercial relationship with the lotto light suite of agents because nobody has examined the matter and produced a report.

What is lotto light?

Ms Tara Buckley

We call it lotto light because it will be what will be available through any establishment that has a payment service machine. Anyone who has a payzone machine will be able to offer lotto light. It is called lotto light because the full suite of products is not offered, rather it is limited to the national lottery draw and a small range of products.

How will the suite of products available in traditional lenders differ from what is suggested might happen if services are offered in a barber shop or elsewhere?

Ms Tara Buckley

Our understanding is that customers will only be able to purchase some of the products available under lotto light.

Will they be able to purchase products such as lotto, lotto plus, EuroMillions and other such products?

Ms Tara Buckley

I understand that the system may be simpler – customers could buy a quick pick or a lotto line, but not a full range of products.

That has not happened yet.

Ms Tara Buckley

Our understanding is that it is being rolled out as we speak.

Is Ms Buckley aware of any outlet currently offering the lotto light model, as she calls it?

Ms Tara Buckley

We are aware of people being approached about it.

Is Ms Buckley aware of anybody actually selling-----

Ms Tara Buckley

I think post offices are now providing the lotto light range.

Okay. It was not referred to, but one of the outlets about which Ms Buckley is concerned are post offices. A postal services Bill will come before the Seanad today. We regularly discuss how we want to enhance the role of post offices, but Ms Buckley has concerns that post offices-----

Ms Tara Buckley

No, we do not have concerns about it. Rather, we are concerned about the different treatment of different types of agent. We are concerned that business would be diverted from our members. Given that the legislation stated retail agents' commission would be ring-fenced, we believe all forms of retail agent should receive the same commission.

Ms Buckley is sticking up for post offices, barber shops and bookshops. I am trying to tease out the issue. I have to speak on a Bill in the Seanad. We have a fairly good idea of the views of the witnesses from the summary. They are concerned about the proliferation of outlets, how gambling has traditionally been managed and that the more things go online the more underground they become. The system then becomes more insidious and it is more difficult for people to see a problem. If somebody buys 1,000 lotto tickets, it is fairly evident that there may be an issue, something which is not apparent when he or she does the same on a phone. The regulator is very new. Is it the view of Ms Buckley that she would like to have better engagement with him?

Senator Paddy Burke took the Chair.

Ms Tara Buckley

It is more that we think there are things the regulator should be doing. If one compares the website of the UK regulator to that of the Irish regulator, it appears that the UK is more proactive. It produces reports, carries out investigations and monitors the process. As the regulator develops here, we would like it to develop along those lines. We need to know that there is a good and authoritative independent figure scrutinising what is happening. It is in our interests to maintain the integrity of the national lottery and its brand and retain consumer confidence in the national lottery.

I thank Ms Buckley and the commission.

I welcome Ms Buckley. I wish to pick up on some of Senator Horkan's questions. I ask Ms Buckley to clarify which retailers are represented by RGDATA. How many retailers does it represent and are they of a mixed size?

Ms Tara Buckley

We represent independent family-owned shops. Around 90% of our members are in some type of buying arrangement because that is the way the independent sector has emerged. Our members own about 3,500 shops. Some operate under SuperValu, Centra, Spar, Londis, Gala or Costcutter. Our members are in every town and village in Ireland, from supermarkets to smaller stores.

Ms Buckley said the commission earned by retailers is 6%. Does 6% of the sale price of every scratch card sold go directly to the retailer?

Ms Tara Buckley

Yes.

The 6% commission also applies to sale of lotto tickets at terminals. Who is responsible for the maintenance of machines?

Ms Tara Buckley

The national lottery installed the machines in stores and operates with retail agents. In general, the national lottery managers the machines.

It owns the machines.

Ms Tara Buckley

Yes. We turn the lights on, provide a member of staff and open and run shops. It was very important that we maintained our 6% margin. The Deputy must remember that I represent shops throughout the country which are struggling. The national lottery is important because it creates footfall in stores. It is important that stores attract people in, and something like the national lottery is important to our members.

Is the commission arrangement different for EuroMillions?

Ms Tara Buckley

No, my understanding is the commission arrangement is the same. When the licence was sold we spoke with the Minister at the time and made the point to the committee that it was very important for our members that the commission model for national lottery agents was ring-fenced. That was done, which we welcomed.

There is a 6% margin for EuroMillions.

Ms Tara Buckley

Yes.

I refer to the online presence of the lottery. It is a whole new world to me. I visited the website and alternative games popped up such as mini keno and instant lotto. Some 19 of the 21 games on the website are also sold as scratch cards in shops.

Ms Tara Buckley

Scratch cards are available in shops. Customers can play various games via them.

There are 19 different scratch cards under the national lottery.

Ms Tara Buckley

Yes.

The days of winning streak are long gone.

Ms Tara Buckley

Yes.

From the data provided by the regulator, I note 5% of the turnover in 2016 came from online sales. I imagine that is a target for significant growth, given that such a model cuts out retailers. Ticket sales for 2016 were €750 million, up from €670 million in 2015. The figure for draw-based games was €530 million, while scratch cards and online instant win games totalled €220 million. It also stated 95% of sales were retail and 5% were online. Is betting duty payable for online national lottery sales?

Ms Tara Buckley

I do not know.

I doubt it is. Ms Buckley raised concerns about online gambling and a lack of controls. Gambling control legislation has still not been enacted. Is that an area that can be abused? Online gambling is available from all of the main bookies, a sector which is currently not controlled.

Ms Tara Buckley

What I was trying to highlight is that somebody today could go on. There is a national lottery in the national lottery app but one could also just Google "Play the national lottery" and be directed to all these sites. Half the time, the punter does not know these sites have nothing to do with the national lotteries of the various countries. One is gambling on the results of a national lottery in any country. There are sites available where one can do this. None of one's money goes to good causes, but when one goes in one might think one is playing the Irish national lottery or the French. However, while one might think one was playing the national lottery and giving some money to good causes, the fact of the matter is that one is not. A huge amount of traffic is going there now. It is not going to the actual national lottery website or app. The traffic is going onto these lotto type platforms.

Who is running those?

Ms Tara Buckley

Companies based in Gibraltar and other countries. The concern is that one can get a licence through white-listed gambling. These are licences to operate these types of websites. The UK has recognised that this is a threat to its national lottery and started a process to introduce legislation to address it. The UK is considering a requirement to get a licence in the UK if one wants to interact with UK lottery players.

Am I right in saying that the only places online that one can play the actual national lottery games are the websites of those national lotteries, for example, www.lottery.ie?

Ms Tara Buckley

That is what the Deputy and I think should be happening, but people going online might think they are playing it from these other lotto type websites not realising they are not actually on the Irish national lottery website. They think they are playing the Irish national lottery.

Are customers who buy cards regularly in the shops savvy as to the distinction between the 19 different cards? Are they looking for something in particular? What is the marketing idea behind having 19 different scratch cards? Do most of RGDATA's member shops sell all of them or just the most popular ones?

Ms Tara Buckley

There are point-of-sale units. If one goes into a newsagent or convenience store, one will see the various games at the point-of-sale unit. It is about variety and different types of games. It is to keep the thing lively and change it as time goes on so that it is not always the same.

Ms Tara Buckley

Some people like scratch cards and some like playing the lottery.

It is a really serious product differentiation. They have diversified to such an extent now that I am flicking through all of the games and do not recognise the vast majority. Presumably, there is a market for each one.

Ms Tara Buckley

Our view is that it is important that a regulator monitors the games and the chances of winning so that one knows what is happening with these different games. There needs to be some type of overview. Are new games being suggested that are being rejected? We do not know.

Is there a case for putting a limit on the number of games? If a company wants to introduce a new game, it could then take one of the existing games out of commission. All one is doing by introducing more and more games is seeking to penetrate the market even further and get more people introduced to gambling on a regular basis. That is the net effect of all this. It is a commercial company now with a very direct interest in getting more people in the country gambling. The more regularly they gamble, the better it is. Having 21 different lottery products seems bananas to me.

Ms Tara Buckley

The point we make is that this is a licence that is being run on behalf of the Irish Government and if that is the case, it is probably the committee that needs to address the issue rather than me. The reality is whether the committee is happy that the type of oversight is happening. Certainly, we believe there should be more transparency about what type of oversight is happening, how these games are being analysed and monitored and how player interests and the public interest are being managed. There is an opportunity with the national lottery regulator to do that work and publish reports for us to see.

Is it still difficult for a shop to get a lotto terminal?

Ms Tara Buckley

No.

Ms Tara Buckley

That was the past.

What kind of investment is required?

Ms Tara Buckley

The shop has to pay a bond but the reality is that once the new licence operator came in, anybody who wanted a national lottery agent's licence could pretty much get it. In the meantime, the market had consolidated. Many very small shops had closed, including many retail newsagents, so most places selling the national lottery were the bigger stores in the middle of towns and they already had the agency.

Is the percentage of coverage increasing now all the time? Is there a proliferation of lotto availability in shops?

Ms Tara Buckley

Approximately 3,700 shops are selling the national lottery. With this new national lottery light, that will expand considerably. Obviously, there is also online.

I welcome Ms Buckley to the committee. The cost of the lotto panel went up. Has Ms Buckley seen an increase or reduction in sales since the cost of the panels increased?

Ms Tara Buckley

The sales go up when the actual pot goes up. If one suddenly sees the jackpot jump to several million, that is when one sees lots of sales. There have been a few big jackpots, which have generated much more sales.

There has been an increase in the number of numbers also, which means one has less chance of winning. Is that right?

Ms Tara Buckley

Yes.

This has all happened since the new operator took over.

Ms Tara Buckley

The view is that if one can make the jackpots bigger, one generates more interest and excitement and creates more sales. By adding the numbers, one has a greater chance of the pot rolling over.

Have retailers' sales gone down since the new operator took over or have they gone up?

Ms Tara Buckley

When it first came out, there were mixed reviews from our members. In the past year, however, the national lottery has established a retail programme and done a great deal of work to assist retail agents in terms of their point-of-sale material and the lotto machines they have in-store. Our members would say the star programme the national lottery introduced has been positive for lottery sales. Consumer sentiment has improved slightly albeit not all over the country. Where it has improved, one also sees people back buying lottery tickets, which they were not buying for a few years when sales of everything were down.

Some of the 21 new instant wins are very addictive like the instant lotto and the mini keno. Ms Buckley says there is a limit of €75 per day. How is one limited to €75?

Ms Tara Buckley

I am no expert on this. This is what happens if one signs up for the national lottery online. I just stated to the committee what the limit was. I think one puts one's credit card details in and on any one day can only buy €75 worth-----

Ms Tara Buckley

Yes.

What if one has two credit cards?

Ms Tara Buckley

My understanding is that one is not supposed to open more than one account.

These are highly addictive. The lotto cannot sell in pubs or where alcohol is consumed, but this is a way around that. A person can play the game while having a pint in the pub. The lottery has found a way around pubs not selling lotto. Is that correct?

Ms Tara Buckley

The point we have just made is that if anyone out there can monitor and assess this to see who is playing and at what level, it is the national lottery regulator. The regulator is in a good position to monitor this in the best interests of protecting the brand and the interests of good causes. We do not have all of this information but we are aware that it is there. As such, the national lottery regulator should be producing reports on that data and publishing them so that we understand how the games are being played, what sort of money is being spent on them, how much individuals are spending and any other data the regulator can access.

Ms Buckley was very critical of the regulator in her closing remarks.

Ms Tara Buckley

I would not say I am critical but the regulator is in place. What I am saying is that the regulator was appointed in 2014. He needs to step up his game as it is three years down the road. I understand that time was needed to set up and everything else. All I am saying is that I think the regulator needs to be challenged to start producing data and be more public about what he is doing. For all I know, the regulator may be doing so but when one looks at the website one cannot see reports. We were promised a report on the outages but we have not received one. It would be interesting to know whether a report has been compiled and whether it is possible to make it public. The regulator could be more public.

Has the regulator produced public reports since he took over in 2014?

Ms Tara Buckley

Not that I am aware of.

Gambling has become more prominent in this country.

Ms Tara Buckley

Absolutely.

New ways been found to get around the laws.

Ms Tara Buckley

Certainly. It looks to me like there are many more ways to gamble nowadays.

Ms Buckley mentioned that there was a proposal to increase sales by introducing a lotto light whether that is through restaurants or any place that has a point of sale.

Ms Tara Buckley

Yes. As I explained, we are concerned that the retail agents are treated in a particular way and the ring-fenced commission is paid.

Is Ms Buckley saying that one will be able to buy a lotto ticket when one pays one's bill for a meal in a restaurant?

Ms Tara Buckley

Our understanding is that if one has a particular payment machine one will be in a position to offer a lotto light package.

Can lotto light be sold in a restaurant that sells wine, beer or whatever?

Ms Tara Buckley

The Acting Chairman has asked an interesting question. Perhaps lotto light cannot be sold in licensed restaurants.

Has Deputy McGrath a further question?

I have one question. The regulator's opening statement has been provided to us. It states that the number of retail outlets has increased by approximately 1,500 to 5,200 since commencement of operations under the licence. Was the regulator referring to shops when he referred to the number of retail outlets?

Ms Tara Buckley

Some of the outlets will be shops and some will be multiples. I represent the independent sector so I do not know. They may be multiples. The extension of the service through the post office network will have added to the number of retail agents.

It is a very significant increase. Originally, the figure was 3,700 but it has increased by 1,500, or by 40%, which is significant. Online sales amounted to close to €40 million in 2016, according to statistics.

Does Ms Buckley think that we need further legislation? She has said that legislation is being introduced in the UK. Ireland has the same operator as the UK.

Ms Tara Buckley

Yes.

The UK has more stringent laws than we do. Is Ms Buckley saying we need more legislation to control the sale of games and tickets?

Ms Tara Buckley

This is actually not about the national lottery; it is about these platforms that can sell lotteries without an association.

Is Ms Buckley saying they have used the national lottery to open avenues of sales?

Ms Tara Buckley

Separate Gibraltar-based gambling organisations have spotted that they can sell people a ticket to gamble on a lottery anywhere in the world and present it to people as if they are buying a ticket for that lottery. One is not because there is no association with the actual lottery. The UK is looking at making sure that if one presents an opportunity to play the UK lottery in the UK to a UK citizen that one needs a licence from the UK Gambling Commission.

For the record, half the increase in the number of retail outlets relates to post offices. They have been extended from approximately one third of post offices to all post offices, which accounts for half the increase, or half the 1,500 additional outlets since the licence was awarded.

Ms Buckley mentioned that outages took place in 2015 and 2016 where computers shutdown.

Ms Tara Buckley

In 2015, an outage caused the Irish national lottery to be cancelled for the first time in its history.

Ms Tara Buckley

Subsequent to that, there were some outages but they did not lead to the cancellation of a draw. There were some other problems with outages.

Do we know whether anybody suffered a loss due to the outage? Could some people have lost money due to the outage?

Ms Tara Buckley

At the time customers would have gone to an outlet to play.

Ms Tara Buckley

One could not sell them anything, so that is why the draw was cancelled. There was a concern that confidence would be lost in the technical platforms used by the national lottery. It is one of the jobs that the regulator has. We would have liked to have seen his report on the reasons for the outage.

Did Ms Buckley say there was another outage?

Ms Tara Buckley

There were a number of other glitches later in 2015 but they never reached the same level as the one earlier in the year.

Did Ms Buckley say a draw took place?

Ms Tara Buckley

It was the first time that the national lottery cancelled a draw.

Did people get their money back?

Ms Tara Buckley

No. One could not buy a ticket

Could one not buy a ticket?

Ms Tara Buckley

One arrived at the store to buy a ticket but one could not buy it because the system was down.

Did anyone buy tickets earlier?

Ms Tara Buckley

If so, the tickets were entered in the next draw.

Ms Tara Buckley

It was the first time that a draw had to be cancelled.

We think they were put in. Does Ms Buckley know that for sure?

Ms Tara Buckley

The point we are making is that something happened to cause the technical glitch.

Ms Tara Buckley

We believe that we should know why it happened. We should also know what has been done to ensure that the system being used has integrity and that glitches will not happen again.

Has a back-up system been put in place since the outages occurred?

Ms Tara Buckley

We have been told that there is by the national lottery. It would be nice to see an independent report telling us what happened.

There has been no independent report.

Ms Tara Buckley

There may have been a report but it was not published.

RGDATA has not seen it. I thank Ms Buckley for her attendance.

Ms Tara Buckley

I thank the Acting Chairman.

In view of the fact that this session has finished earlier than planned. I propose that the committee suspends for a few minutes before commencing the second session. Is that agreed? Agreed.

Sitting suspended at 5.07 p.m. and resumed at 5.15 p.m.

I welcome Mr. Liam Sloyan, national lottery regulator, and Mr. Derek Donohoe, deputy regulator. I draw the attention of witnesses to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable.

I invite Mr. Sloyan to begin his opening statement.

Mr. Liam Sloyan

I thank the committee for inviting me to provide an overview of the operations of the national lottery. At the outset, and to put my presentation in context, I consider it useful to set out the respective roles of the operator and the regulator, which are set out in the national lottery Act 2013, and the licence to operate the national lottery. Under the Act, the operator has "the sole purpose of operating the National Lottery in accordance with the terms and conditions of the licence". The operator must report to the regulator on its activities and it must appear before this committee when requested to do so. The Minister for Public Expenditure and Reform awarded a 20-year licence to the operator, Premier Lotteries Ireland, PLI, on 27 February 2014 and PLI began operating the national lottery on 30 November 2014.

I was appointed as the first regulator from 17 November 2014. Prior to that, the Minister acted as regulator. Since establishment, we have put in place an expert team to regulate the market. Our team includes regulatory, risk management, audit, accountancy, psychology and legal expertise. I am an actuary with more than 25 years of experience working in regulatory areas in the private and public sectors. I am joined today by the deputy regulator and head of audit and finance, Mr. Derek Donohoe, who is a former partner in a leading Irish accountancy practice with significant experience of auditing, forensic accounting, corporate governance and compliance.

The functions of the regulator under the Act are to procure the holding of the national lottery; to monitor and enforce compliance by the operator with the Act and the licence; to exercise enforcement rights of any trade mark of the national lottery; to consider for approval certain matters relating to the national lottery, including schemes for national lottery games; and to manage and control the national lottery fund.

In carrying out these functions, the regulator’s objectives are probity, participant protection, sustainability and, subject to the foregoing, maximising returns for good causes. Accordingly, the regulator monitors and enforces compliance by the operator with the Act and the licence and considers - and approves or declines to approve - proposals relating to certain matters received from the operator. Where an operational matter does not require approval and does not breach a term of the Act or the licence, this is a matter for the operator. I hope the committee will understand that, in my presentation, we may at times only be able to speak in general terms. This is because, like other regulators, our role requires that we respect commercially sensitive and confidential information.

In relation to compliance by the operator with the requirements of the Act and the licence, the regulator continuously monitors the activities of the operator.

Such monitoring includes oversight of data and systems of the operator. This is real-time access and includes, for example, monitoring sales and cash flows. It also includes oversight of the independent control system, which duplicates the activities of the operator's business system and provides an important verification tool. We carry out reviews of the operator's processes and controls. For example, we have conducted reviews of the operator's processes for risk management, anti-fraud, prizes management and fitness and probity. We have reviews of specific matters, such as technology outages. We receive and review of regular reports from the operator, including management reports, reports on IT performance and trading reports. We monitor those. We review arrangements for and the output of the operator's internal and external audits. An area on which we are very focused is the ongoing review of online play, including the controls set out in the licence, but also play activity. We get data on this from the operator regularly.

Our oversight informs our considerations when proposals put to us by the operator are being assessed for approval. In doing this work, we have overseen enhancements in a number of areas, including risk management, internal audit, governance of information and communication technology and controls for online play.

With regard to proposals from the operator, we consider requests for approval of certain matters, which, under the Act and the licence, require the approval of the regulator. Such matters include codes of practice for advertising and promotion, sales, participant relations and employee vetting, in addition to proposals relating to schemes for lottery games and third party providers.

In total, the operator has submitted 69 requests for approval. These were considered in accordance with the Act and the licence, and on 60 of the occasions further information was sought by the regulator or the operator chose to submit amended requests for approval, or both. Ultimately, 59 submissions received from the operator have been approved.

A key function of the regulator is to manage and control the national lottery fund. We review weekly detailed financial reports and receive and disburse funds as provided for in the licence. Under the licence, the amount allocated to good causes is equal to 65% of the difference between total net sales and the amount in respect of prizes. In 2016, €218.9 million was transferred for good causes, €7 million of which related to sales in previous years. In 2015, €193.3 million was transferred in respect of good causes.

Reports we have received from the operator in respect of 2016 include the following in regard to the operation of the national lottery. In 2016, 1.4 million people played lottery games on a regular basis, representing more than 40% of the adult population, and almost 70% of the adult population played the game occasionally.

Ticket sales for 2016 amounted to €750 million. The figure for 2015 was €670 million. Sales for draw-based games amounted to €530 million, while scratch card and online instant-win games generated €220 million. With respect to the sales channel, which includes sales for draw-based games and instant games, 95% of sales were retail, while 5% were online.

With regard to the retail estate, the number of retail outlets increased by approximately 1,500 to 5,200 since the commencement of operations under the licence. Around half of the increase relates to the availability of lottery games being extended from approximately one third of post offices to all post offices, including all sub-post offices. It is noted that most of the increased retail estate provides a restricted service in terms of the range of games and the options available. Of course, it is important to note the same controls in respect of probity and player protection and all the rules set out in the licence in respect of retailers apply equally in respect of the new outlets.

With regard to systems availability in 2016, over the whole network, terminals were available to sell tickets 99.9% of the time on average. Availability of website services varied from 99.6% of the time to 99.8% of the time.

I hope that the presentation has been helpful for the committee in providing an overview of the operations of the national lottery and of the role of the regulator of the national lottery. I look forward to answering members questions.

Senator Gerry Horkan took the Chair at 5.23 p.m.

I thank Mr. Sloyan and Mr. Donohoe for their attendance and their opening remarks on behalf of the regulator. The regulator is the policeman for compliance with the licence. That is a key aspect of its work. How many staff has the regulator in the delegates' office.

Mr. Liam Sloyan

We have sanction for ten staff. We have eight.

Eight posts are filled. What is the budget of the regulator?

Mr. Liam Sloyan

It is €1.5 million.

Is that funded out of the licence or by the central Exchequer?

Mr. Liam Sloyan

It is funded out of the licence.

It is funded directly.

Have there been breaches of the licence conditions by the operator since it took control in late 2014?

Mr. Liam Sloyan

There have been no findings of any breach by the operator.

Could Mr. Sloyan elaborate on the phrase "no findings of any breach"? If he identifies issues, does he give the operator an opportunity to correct or amend one of its practices? Is the issuing of a finding a formal process? It may not get that far.

Mr. Liam Sloyan

We conduct a number of reviews and analyses of issues as they arise and we identify areas that may need to be addressed. On the question of whether that constitutes a breach of the licence, I said there has been no finding. It would not be appropriate, as a regulator, to indicate otherwise because, as a regulator, one needs to be open to the possibility-----

Mr. Sloyan has found no evidence of a breach.

Mr. Liam Sloyan

I have made no finding of a breach.

On the question of the proportion of the sales proceeds that goes towards good causes - this would be governed by the licence - Mr. Sloyan might clarify the current procedure for the committee. In his opening remarks he said, "Under the licence, the amount allocated to good causes is equal to 65% of the difference between total net sales and the amount in respect of prizes". Is there a minimum percentage of sales that must go towards prizes?

Mr. Liam Sloyan

There is. Under the Act, as least 50% of sales must go towards prizes.

Mr. Liam Sloyan

In recent years, it has been around 56%.

Has that percentage fallen since the new operator came into place? What was the percentage devoted to prizes for the customer under the old regime?

Mr. Liam Sloyan

It would have been broadly similar under the old regime.

Therefore, there was no reduction in the percentage of sales proceeds paid out in prizes.

Mr. Liam Sloyan

I would need to look at the exact figure to determine whether there was any reduction but the figures are broadly the same.

The licence requires at least 50% to be paid out in prizes, however. Is this a proportion of net sales?

Mr. Liam Sloyan

Yes.

Net sales is gross sales minus certain costs.

Mr. Liam Sloyan

No. It is just the figure used because I suppose that in some cases one has to make an estimate in respect of scratch cards or whatever. "Net sales" is the phrase used in the licence.

Mr. Derek Donohoe

On occasion, there are returns. A ticket that is sold might be issued in error for some reason. It might have the wrong numbers or the player might change his mind, in which case there is a period in which he can return the ticket. Therefore, total net sales are sales minus those returns.

That is fine. In 2016, just under €219 million was transferred for good causes, €7 million of which related to sales in previous years. In 2015, the €193 million was transferred in respect of good causes. Therefore, there was a significant increase in the cash amount that went to good causes.

Mr. Liam Sloyan

There was. That is reflected in the increase in sales. If one subtracts the €7 million from the €219 million, it amounts to approximately €212 million, which gives an increase of approximately 10%. This is similar to the level of sales. One is done on the basis of cash flow movement whereas the other is accruals. They will not line up exactly but-----

Is the amount going to good causes at an all-time high? I acknowledge the delegates are responsible only since 2013.

Mr. Liam Sloyan

It was higher around-----

Mr. Derek Donohoe

It was in 2008.

Ten years ago or whatever.

Mr. Liam Sloyan

That might have been the all-time high and it declined after that.

Was that based on sales?

Mr. Liam Sloyan

Yes.

Was the lengthening of the odds by the addition of two numbers to the main draw something that the sanction of the regulator was required for or was it provided for in the licence?

Mr. Liam Sloyan

The Deputy is correct. It required regulatory approval. It was a game change and, as such, required regulatory approval.

It required approval. The chances of winning the jackpot went from over 8 million to one to something like 10.7 million to one. Is that correct?

Mr. Liam Sloyan

Yes.

Does Mr. Sloyan feel that was adequately explained to the public and that there was an adequate awareness campaign to make people informed that the odds of winning were significantly reduced?

Mr. Liam Sloyan

It was well understood at the time that there was an increase in balls which increased the odds.

Was there a corresponding reduction in the prospect of winning the lesser prizes?

Mr. Liam Sloyan

No, the probability of winning the lower prizes increased.

Mr. Liam Sloyan

There were new prizes introduced at the lower prize.

It was the jackpot that was adversely affected.

Mr. Liam Sloyan

Yes but the percentage going to prizes remained unchanged at 52%, which is the case for the lotto game. Essentially, the jackpots are expected to be higher under the new system.

That was one of the 69 requests made for approval to introduce new measures. Ultimately, 59 submissions received from the operator have been approved. Were ten refused or are they still the subject of a request for further information and so on?

Mr. Liam Sloyan

Some were withdrawn. On 60 of the 69 occasions we asked for further information. The information we asked for was indicative in some cases of issues we had. On some occasions amendments were made to the proposal. On others the proposal was just withdrawn. Occasionally, there have been proposals refused.

Is Mr. Sloyan at liberty to give us information on the type of proposals that were refused?

Mr. Liam Sloyan

I need to be careful when speaking about the operator's business plans. I would refuse a proposal where I have concerns about our objectives under the Act, such as player protection, probity, sustainability and funds for good causes. Where I take a view that the risks for any of those objectives are excessive I am prepared to refuse and have refused.

Is the regulator subject to FOI requests?

Mr. Liam Sloyan

Everything is subject to FOI requests.

Does commercial sensitivity come into play?

Mr. Liam Sloyan

Yes, it would have to be considered.

Ten have been refused. Mr. Sloyan heard the exchange earlier with Ms Buckley from RGDATA on the issue of the number of products. There are 21 different products now, 19 of which are available in shops and online and two are available exclusively online. Is there a limited number of lottery products the operator can bring to the market? Does it require the regulator's approval every time it brings in another product?

Mr. Liam Sloyan

It requires our approval every time. The Act provides for approval of a scheme for lottery games, which is the approach used in the UK, whereby the regulator effectively approves rules and as long as the operator adheres to those rules it can introduce a new game that adheres to the framework. To date, we have not approved any scheme for lottery games so any new game requires approval.

How many has the regulator approved?

Mr. Liam Sloyan

How many new games have been approved?

Mr. Liam Sloyan

I need to check but I am guessing that 30 to 40 new games have been approved since the licence came in. I would say about 30. There were around 15 in 2016. I can check what the figure is for 2015.

There are 21 on the market through this operator.

Mr. Liam Sloyan

The reference to 21 may have been a reference to the Internet games which require separate approval to the retail games.

How many retail games are there? I could not keep up with the 21. How many are there?

Mr. Liam Sloyan

There is a similar number of retail games, probably slightly more.

Are a number of them a variation of the draw?

Mr. Liam Sloyan

Yes, so Lotto Plus-----

Scratch cards, lotto and EuroMillions are retail games. Is there anything else?

Mr. Liam Sloyan

Winning Streak is a scratch card. There are also games like Telly Bingo, Lotto 54321, Lotto Plus and EuroMillions Plus.

Are some of them time limited? Do they expire? Are some of them licensed for six months or eight months or for a season, such as winter or summer, or do they all last forever?

Mr. Liam Sloyan

That is exactly what happens. There tends to be a number of new games introduced around Christmas with a Christmas theme.

Could Mr. Sloyan supply the committee with a list of every game, when it started and when it stopped, since the regulator's inception for our own understanding of what is happening?

Mr. Liam Sloyan

Yes.

Under the current licence, the regulator has approved approximately 30 new games?

Mr. Liam Sloyan

Yes, that is the case.

Some are temporary.

Mr. Liam Sloyan

Yes, some are temporary.

They are time limited.

Mr. Liam Sloyan

Yes.

Are many of them new scratch cards? Are most of them variations of the draw?

Mr. Liam Sloyan

There have not been any new draw based games since my appointment. There have been amendments to the draw based games, for example, the extra balls in lotto and the extra ball in EuroMillions.

I am officially lost. How many scratch cards are there currently on the market through the national lottery?

Mr. Liam Sloyan

I estimate about 20.

Mr. Derek Donohoe

There are approximately 20 to 25 scratch cards.

I thank Deputy Cullinane. There are 20.

We had 19 and 21 referred to in the earlier presentation and now it is somewhere in between at 20.

Mr. Liam Sloyan

The 19 and 21 were a reference Ms Buckley made to the online portal. She said there were 21 IWGs, 19 of which she considered also had versions in the retailers. That is my understanding of what she said.

What are Mr. Sloyan's views on the proliferation of games available online and how it interfaces with gambling control, the need for responsible advertising and promotion and the need to have proper controls in place? What role does the regulator have in that area, if any?

Mr. Liam Sloyan

It is an area we are very much focused on. The licence includes controls on online play. We oversee the implementation of those controls, which include the spending limits. In addition, we have overseen the introduction of further controls by the operator, which include a player protection panel that analyses the data returns in respect of online play. There tends to be a hierarchy of risk in these types of things. Draw based games are probably the lowest risk; scratch cards and online play is riskier. The operator analyses the various returns and data on online play in order to address any issues it sees in the activities. If it considers there is play activity that indicates a problem, it writes to advise the player of the tools that are available to assist him or her. They include player exclusion. Players can self-exclude themselves and they can set their own limits. They can contact various bodies for help.

In addition, we limit the approval in respect of online games. The approvals are time-limited and we receive player protection reports each quarter from the operator which reports on online activity and informs our consideration of any roll-over of approval regarding online playing.

Are the witnesses satisfied with allowing more games to be approved, retail outlets and online activity in terms of lottery gambling to take place? Do they have any remit to control that overall, given the potential societal impact?

Mr. Liam Sloyan

There are a number of areas where my approval is required. I refer in particular to games. When I receive requests for approval, I assess them against my objectives under the Act, including player protection. I may refuse them on that basis.

My observation is that over the past number years, especially under the new operator, the number of games, platforms and distribution channels has grown significantly. They are everywhere, which has consequences for society. It is constantly in people's faces. Gambling can destroy people's lives – not necessarily this type of gambling, but more generally.

Mr. Liam Sloyan

I can assure the committee that we take all of that very seriously. When we receive a request for approval for a game, we assess the player protection risks against the academic literature and advice. We have engaged a leading world expert on child play and gambling to advise us on games and assessments. We take great care to oversee the controls and consideration of games for approval.

If the witnesses felt the 2013 Act needed to be changed or strengthened they would let that be known.

Mr. Liam Sloyan

Yes.

I welcome the witnesses. It seems that since the Houses of the Oireachtas passed legislation on the lotto, things have changed completely and the company has found new ways to increase its sales. We have only heard from Ms Buckley about sales. I can now sit in a pub where lottery sales are prohibited, but the company has found a way around that. People can sit in pubs to their hearts' content and lose €75 a day. Can the witnesses explain how the €75 limit operates?

Mr. Liam Sloyan

That is set out in the licence to operate the national lottery. A player must register to play online. Players are limited to €75 per day, €300 per day or €900 per month.

A player could register under a second name.

Mr. Liam Sloyan

That is also an area on which we are focused. The operator must have controls in place to protect against that eventuality.

There is protection against it.

Mr. Liam Sloyan

In the case of larger prizes, people have to prove their identity. A person using a false identity when registering may not receive a prize.

That does not protect the client; rather, it protects the payout master.

Mr. Liam Sloyan

The purpose is-----

The paymaster does not have to pay out.

Mr. Liam Sloyan

The purpose is to dissuade people from engaging in that activity.

A person could have lost €75 every day for days and then cannot accept a payout because he or she got around the system by registering twice, three times or whatever.

Mr. Liam Sloyan

We are focused on it being made clear to the player-----

Has it occurred?

Mr. Liam Sloyan

That there were multiple accounts?

Have there been payouts that were not made?

Mr. Liam Sloyan

Wins that were not-----

Were there wins that were not paid out?

Mr. Liam Sloyan

There have been occasions where wins were not paid out regarding players from abroad or outside of the jurisdiction.

As we heard from Ms Buckley, many accounts are set up outside the country and are not based in Ireland, but rather in Gibraltar or elsewhere. Players are based outside of the jurisdiction and the lotto does not have to pay out.

Mr. Liam Sloyan

The lottery will not pay out on any play outside of the jurisdiction.

How would the lottery prove that? If a person is playing on a phone on a beach in Spain, wins and then returns home, how does he or she claim a prize?

Mr. Liam Sloyan

The rules refer to players who are resident in the jurisdiction. People can play on a beach in Spain. Those resident in the jurisdiction can play online.

There are no blocks similar to those that mean one cannot watch certain television channels in certain countries. If one wants to use the national lottery app in a foreign jurisdiction, is that possible or is it blocked?

Mr. Liam Sloyan

My understanding is that it is possible.

Where does the money that is supposed to be paid out but is not go? Who receives it?

Mr. Liam Sloyan

On the occasion about which I am thinking, all funds were returned to the player.

Mr. Derek Donghue

A player who had registered was not resident in the State. The person submitted a claim for a win and had to provide identification and details. When identified as being outside the State, the person was refunded the money spent playing up to that point in time but not paid the winnings.

If a person wanted to lose money outside of the State, was that okay? If a person kept losing money outside of the State we would not know about that.

Mr. Liam Sloyan

In the particular instance to which I referred, the individual said he or she had played from inside the State. People cannot register to play online with an address outside of the State

People use addresses inside the State.

The guidelines must not be clear if a client was told a prize could not be claimed because an address outside of the State was given. Would that be true?

Mr. Liam Sloyan

The guidelines are clear regarding the fact that one has to be registered as resident in the State.

Mr. Derek Donghue

In order to register as an online player, one has to be resident in the State. To register as an online player one is only permitted to have one account. They are the conditions under which players register.

The website allows people to put in a foreign address and register.

Mr. Liam Sloyan

No, it does not.

How does a person do that? I understood the person to whom the witnesses referred gave a foreign address which was accepted.

Mr. Liam Sloyan

People have to provide an address in the Republic.

The person gave a false address.

Mr. Liam Sloyan

Yes.

As we heard from Ms Buckley, the national lottery is planning a major expansion, in terms of extending the lotto to points of sale at restaurants, cafes, barber shops or wherever there is a point of sale. How will this operate? Obviously, the commission will be lower and, therefore, more beneficial to the national lottery.

Mr. Liam Sloyan

The same rules will apply in respect of any retailers. The commission will be the same. It will be the same margin and the same rules will apply to player protection and probity, and all of the requirements that apply in respect of retailers.

Will it be the same suite of products?

Mr. Liam Sloyan

This particular restricted service will not have the same full suite of products as is available to retailers.

So the regulator has approved the rolling out of this to other outlets.

Mr. Liam Sloyan

The licence does not require my approval to go to new outlets.

The products cannot be sold in cafes, bars or restaurants where there is alcohol.

Mr. Liam Sloyan

Absolutely, that would be a breach of the licence.

Does the regulator believe the Houses of the Oireachtas should bring forward legislation to help put in place more barriers or help control the gambling addiction in the country at present?

Mr. Liam Sloyan

My role is with regard to the national lottery only. The Act and the licence are relatively new and we are working with them and using them as best we can to protect the interests of players and protect the probity and sustainability of the lottery. We are satisfied to continue on this basis.

Comparing regulation of the UK and Irish lotteries, we see no details on the amount raised for good causes in Ireland but the UK regulator has such details. There is no information on ticket allocations or the integrity of the games in Ireland but there is in the UK. The same operator runs the two lotteries. There is no verification of the system by the Irish regulator but there is by the UK regulator. No record is kept of licence breaches in Ireland but there is in the UK. There is only very general material relating to the national lottery licence in the annual reports in Ireland. There is much more stringent regulation in the UK compared with Ireland, but the same operator has both licences. It faces much more stringent regulation in the UK. Does Mr. Sloyan have any proposals to bring the Irish regulator into the same position as the UK regulator?

Mr. Liam Sloyan

We also have very stringent regulation of the operator in Ireland. We are very focused on ensuring the operator complies with all of the terms and conditions of the licence and has all of the appropriate systems in place. We carry out a range of work to achieve this, as I set out in my presentation, including ongoing oversight of its data systems, overview of its control framework, consideration of its reports from internal and external audits and reviews of certain matters as they arise. We apply the regulations very strictly.

We have heard from Ms Buckley there does not seem to be information on why the outages occurred in 2015 and 2016 and what regulations have been put in place to ensure they do not happen again.

Mr. Liam Sloyan

The reasons for the outage in 2015 were published at the time by the operator, which appeared before the committee to discuss them. We engaged with the operator at the time and examined its systems for control and governance of information and communications technology. We oversaw a number of enhancements in this area, including in respect of its reporting and escalation system, its risk management system, its identification of risks and its putting in place an ICT-specific risk management system, with mitigations for each identified risk as required.

Mr. Sloyan is stating we heard from the operator, but we did not hear from the regulator with regard to the outage in 2015.

Mr. Liam Sloyan

What I have set out is the work we did at that time. The output of this has been the increase in network performance in 2016, which was at 99.9% availability.

There has been a reduction in the money contributed to good causes over a number of years, which has decreased from €205 million in 2013 to €188 million in 2015. There was a peak of €267 million in 2008. The price of the ticket has increased and there seem to be more games but we have seen a reduction in the contribution to good causes.

Mr. Liam Sloyan

The amount allocated to good causes in respect of 2016, as noted, was €218.9 million, of which €7 million related to previous years. There has been an increase in funds to good causes in the most recent year.

It increased again in 2016.

Mr. Liam Sloyan

Yes.

What is the percentage?

Mr. Liam Sloyan

The amount to good causes is 65%.

Of what remains after the prizes are paid.

Mr. Liam Sloyan

Yes.

Is all of the online gaming taken into account?

Mr. Liam Sloyan

Yes, it is included. The online channel accounts for approximately 5% of sales, and it includes the online sales of draw based games which is the majority. People can play the lotto online.

Online sales account for 5%.

Mr. Liam Sloyan

Yes.

So point of sale still accounts for 95%.

Mr. Liam Sloyan

Yes.

So online is not as big a risk as people make it out to be. We have heard very sad cases about people gambling online.

Mr. Liam Sloyan

We are very focused on this issue. We are keeping an eye on the controls in place and assessing whether further controls are required.

Is the €1.5 million paid by the national lottery to staff in the regulator's office a percentage or is it the cost of running the office?

Mr. Liam Sloyan

It is a straight €1.5 million and it varies with the consumer price index over the term of the licence and increases or reduces with inflation.

I welcome Mr. Sloyan and Mr. Donohoe. Is it correct that Premier Lotteries Ireland has the licence?

Mr. Liam Sloyan

That is right.

It is a 20 year licence.

Mr. Liam Sloyan

Yes.

Is it made up of Ontario Teachers Pension plan, which is the owner of the Camelot group, An Post and An Post pension funds?

Mr. Liam Sloyan

Yes.

It has paid an amount for the 20 year agreement and now it must make a return.

Mr. Liam Sloyan

Yes.

Essentially it is in the business of turning a profit.

Mr. Liam Sloyan

Yes, I would say so.

Mr. Sloyan's job is to regulate this. In his opening statement, Mr. Sloyan stated the functions of the regulator under the Act include considering for approval certain matters relating to the national lottery, including schemes for national lottery games. Our job is to test whether there is sufficient regulation. From what I have heard so far I have a view but I have a number of questions to Mr. Sloyan. What does considering for approval certain matters relating to the national lottery, including schemes for national lottery games mean in practice?

When the regulator is considering whether to approve schemes, to what issues must he have an eye?

Mr. Liam Sloyan

I consider any proposal on the basis of my objectives, which are set out in the legislation. They include probity, the protection of participants, sustainability and returns to good causes.

Protection of participants is one of the objectives.

Mr. Liam Sloyan

Yes. I also have regard to advertising, promotion and reputation.

We will address the protection of participants and walk Mr. Sloyan through some of the products and services offered by the company. Is it true that, in August 2015, two extra balls were added to the drum in the lotto?

Mr. Liam Sloyan

That is right.

The cost increased from €3 to how much?

Mr. Liam Sloyan

To €4 for the lotto.

It is more expensive, but there is a lesser chance of winning. Is that fair to say?

Mr. Liam Sloyan

Yes, but the same percentage was provided-----

It is more expensive with a lesser chance of winning.

Mr. Liam Sloyan

There is a lesser chance of winning the top prize. The smaller prizes are-----

Does Mr. Sloyan consider that to be acting in the best interests of the user?

Mr. Liam Sloyan

The lottery was changed to another prize structure. The same percentage continued to be paid out in prizes.

I understand that. Mr. Sloyan has answered the question that I put to him already by accepting that it is more expensive with a lesser chance of winning.

Mr. Liam Sloyan

That is right.

Mr. Sloyan is the regulator. If the first product is more expensive and there is less chance of winning, is he satisfied that he has done his job of protecting the consumer?

Mr. Liam Sloyan

Yes.

We will move on.

There was a new lotto scratch card and confusion over whether there were €19, €20 or €21 cards. My information is that it is €20, which is what the company calls a product range. How much do these scratch cards cost? Will Mr. Sloyan talk us through the minimum up to the maximum?

Mr. Liam Sloyan

There is a €1 scratch card and-----

Keep going upwards.

Mr. Liam Sloyan

There is a €10 card for the money multiplier.

Are there €20 cards?

Mr. Derek Donohoe

Yes, and a range of-----

I would have thought the regulator would have known that. It was a standard question for a regulator. It is a minimum of €1 and a maximum of €20. Does the regulator view it as a problem that scratch cards are being sold for €20?

Mr. Liam Sloyan

We assess the games before us on the basis of the risk that they pose to players. We examine the academic literature and what it indicates are risks. Under the Act, the price of a ticket is a matter for the operator. That does not mean that we disregard the matter. We-----

I asked Mr. Sloyan about his role. There is some confusion and Mr. Sloyan might be able to help me clear it up. He stated that he had to consider for approval certain matters, including schemes. Was his approval of the €20 card required?

Mr. Liam Sloyan

Yes.

The regulator approved it.

Mr. Liam Sloyan

We did.

So, it was not up to the company.

Mr. Liam Sloyan

We approved the scheme for the game, which included the price, but the price is a matter for the operator.

Does Mr. Sloyan not see a problem with €20 scratch cards? Whatever about €2 scratch cards or people with gambling problems being embarrassed about buying ten, 20 or 30 scratch cards? Being able to buy a €20 scratch card makes it more difficult to protect the consumer. Why was that not one of the regulator's concerns when Mr. Sloyan signed off on this?

Mr. Liam Sloyan

We would have considered all aspects of the game and assessed it against what was advised in the academic literature in terms of which aspects of games pose risks. We would have assessed the whole risk of the game in that context.

What academic literature does Mr. Sloyan mean?

Mr. Liam Sloyan

There are internationally used schemes for testing lottery games. The Assessment Tool to measure and Evaluate the Risk potential of Gambling products, AsTERIG, is one.

Who undertakes the academic work?

Mr. Liam Sloyan

We do it in-house as well. The AsTERIG scheme is used internationally and based on the leading academic expertise in lotteries.

The regulator relies on academic research when making a decision.

Mr. Liam Sloyan

We are informed by it.

When Mr. Sloyan needed to decide whether to sign off on the €20 and €10 scratch cards, he used the academic research. As the person charged with ensuring that consumers are protected, Mr. Sloyan was comfortable signing off on these cards.

Mr. Liam Sloyan

Yes. We also have internal expertise on these matters.

Okay. What about the online presence? It is a major concern for me. There was some confusion around whether the service could be used outside the country and how it worked inside the country. A person can only sign up for one account. How does one do that?

Mr. Liam Sloyan

The person provides his or her details.

Mr. Liam Sloyan

Name, address and date of birth.

Mr. Liam Sloyan

The person would also need to provide some payment details.

Mr. Liam Sloyan

Yes.

Is it possible to provide a slightly different address with a different credit card and have two accounts?

Mr. Liam Sloyan

We are focused on this matter and on installing measures to avoid that kind of situation. I do not want to go into too much detail, because to publicise the operator's controls over how it assesses whether there are multiple accounts would leave those controls open to avoidance.

Is Mr. Sloyan saying that there could be loopholes and he does not want people to know what they are?

Mr. Liam Sloyan

Yes.

That is not a good position for a regulator to be in.

Mr. Liam Sloyan

No. I am also saying that we are working-----

That is what Mr. Sloyan said.

Mr. Liam Sloyan

Hold on. I am also saying that we are working to ensure that the operator addresses any matter that arises. This is a particular focus.

With respect, it is the regulator's job to ensure that any loophole is closed down.

Mr. Liam Sloyan

Yes. We are doing that.

It could be useful were Mr. Sloyan to present the committee with a paper on what the regulator is doing in this regard. The Vice Chairman also asked about how the system worked outside and inside the country and the cap that was applied. In my view, that cap is too high. The issue of the online presence is concerning. We need more information.

What is the Star Store programme?

Mr. Liam Sloyan

It is a programme that the operator is promoting among retailers.

This concerns the promotion, advertisement and sale of the products. Who is Mr. Niall Andrews?

Mr. Liam Sloyan

"Head of Sales and Operations" is his title.

Mr. Liam Sloyan

PLI.

When he tells us that there has been a significant investment of €3 million in the Star Store programme, that is essentially €3 million spent on pushing products.

I remind the Deputy about the rules on naming people. He might refer to what is happening-----

I can refer to him otherwise. What is his title? He is the sales manager.

Mr. Liam Sloyan

He is the head of sales and operations.

PLI's head of sales is quoted as saying that it will invest €3 million in Star Store. He stated: "The impulse element of the tickets is such a big draw. When they're positioned right, they're talking directly to the customer." He said that the objective of the Star Store programme was to drive sales through growth and profitability in stores by making the national lottery agent central to its success, and that the programme was based on a number of key strategic areas in-store: equipment positioning; product range; availability; display and merchandising standards; promotion; and execution. This company is marketing the products and giving advice to retailers on how they can push sales. There is a significant gambling problem in the State. If the regulator's job is to protect the customer, what oversight role has Mr. Sloyan in respect of what Star Store does?

Mr. Liam Sloyan

Any advertising or promotion that the operator engages in must comply with the code of practice on advertising and promotion, which includes a range of rules.

There is a requirement not to use themes that are attractive to under-age players. There is a requirement not to present playing the lottery and winning in certain ways. As such, there are rules and restrictions on the type of advertising and promotion in which the operator can engage and we ensure they are met.

From my baseline, desktop research, it strikes me that there is a lack of real oversight and regulation of how the company is pushing its products. The fact that it is engaging a company to push its products is a red line for me. I put it to Mr. Sloyan that it should be a red line for him also.

I have been told that the odds of winning on a scratch card are one in four or one in five. Is that correct?

Mr. Liam Sloyan

It depends on the scratch card. For some, the odds are higher.

What is the average scratch card? Is it the €2 card?

Mr. Liam Sloyan

Yes. That would be a good measure.

The odds are one in four. However, if one bought a €2 card and won €2, that would be considered a win. It would not really be one.

Mr. Liam Sloyan

The published odds reflect the odds of winning a cash prize, as well as the odds of winning a-----

In his opening statement Mr. Sloyan said he could only speak in general terms about some of his work because of commercially sensitive and confidential information. Will he explain what he means by "commercially sensitive" from the point of view of the regulator's work?

Mr. Liam Sloyan

The definition we use is "information that could, if released in the public domain, have a negative impact on the commercials of the company".

Given that this is a company which has had a monopoly for 20 years, how can the information be commercially sensitive?

Mr. Liam Sloyan

For example, information on the IT infrastructure is generally held securely not just by commercial organisations but by all organisations in view of the risk of hacking and cybercrime.

For a regulator with oversight of-----

Mr. Liam Sloyan

We have access to all of the information.

A regulator must, on the one hand, look at the public interest and then at what Mr. Sloyan describes as "commercially sensitive information".

Mr. Liam Sloyan

That is correct.

What advice did the regulator receive on balancing the public interest and commercial sensitivity? Mr. Sloyan is coming to an Oireachtas committee. We are the legislators and also accountable to the people. Mr. Sloyan is, in essence, accountable to us. When he says he cannot discuss a lot of stuff because of commercial sensitivity, it could be seen as he does not really want to talk about some issues. I could be unfair in saying that, but I am trying to get at the public interest and how the regulator balances it with that which is commercially sensitive.

Mr. Liam Sloyan

I acknowledge that fully. What I meant to say was that commercial sensitivity and confidential information were things I would have to take into account if the conversation was to move in those directions. That is the normal approach taken by regulators.

I will conclude. I thank Mr. Sloyan for his comments. For the record of the committee, I note that I am very concerned about the product range and that there are not sufficient checks and balances to protect citizens against gambling. We need a report from the regulator on the range of cards available, their cost, the online presence and the limitations and protections in place. That is necessary for us to get under the bonnet a little more on this issue. I thank the Vice Chairman for the time given to me.

I thank the Deputy. We will be coming back to this topic. Everyone who has spoken so far - I have a number of points still to make - has concerns. Does Senator Paddy Burke wish to come back in?

The key issue is the absence of information on the regulator's website. It would be no harm if it was brought up to date. Joe Duffy raises many issues on his "Liveline" show. Recently, he raised the issue of gambling, including online gambling, and had quite a number of people on the programme to discuss it. It was stated there were considerable concerns on the part of customers who complained about alleged upselling by some retail agents associated with the Topaz chain of garages. It was indicated that the national lottery regulator felt the national lottery games could not be upsold by retailers.

I am being reminded that this is an allegation against somebody or an entity that is not represented here.

That may be the case, but the regulator said the games could not be upsold by retailers. However, the PLI stated it had legal advice to suggest the games could be upsold. It seems the PLI has a different opinion from that of the regulator, or is it defying the regulator's position on upselling?

Mr. Liam Sloyan

We have written to the operator on this matter and it has made a submission to us which we are considering. On the position in relation to the RTE show, we referred to the clauses in the licence. We did not give a finding at that point. We could only give a finding after concluding our consideration of the operator's submission on the matter.

That is not concluded, is it?

Mr. Liam Sloyan

No.

Will the findings be published when the regulator has concluded its consideration?

Mr. Liam Sloyan

We will need to consider that at the time and in view of the conclusions reached. Depending on the conclusions reached, I hope to be able to publish.

I might ask a few questions with the permission of members. I was not expecting to be in the Chair for the entire session.

Many of the points I wanted to make have been covered by Deputies David Cullinane and Michael McGrath and Senator Paddy Burke. I am an accountant and notice that there is a great deal of financial expertise within the regulator's organisation. However, based on the annual report, there does not appear to be a great deal of expertise from within the gaming or lottery sectors. I am not saying people cannot transition from one job to another, but is there any particular expertise I am missing? Is it fair to say there is an absence of the expertise the regulator might like to have?

Mr. Liam Sloyan

I am very happy with the team of individuals we have, including our head of player protection who is a registered psychologist and advises on-----

I saw that he was a psychologist. Again, we will not name people who are not here. My point is that no one seems to have a background in lotteries or to come from another organisation. We have had a lottery in the country for approximately 30 years, but it seems that everyone on the team is new to the sector. Is that a fair comment?

Mr. Liam Sloyan

That is correct.

In terms of online selling, one can play online on an ordinary laptop, as well as on an app. Is Mr. Sloyan saying that app and other online sales account for only approximately 5% of total sales?

Mr. Liam Sloyan

Yes.

Is that up from a figure of 0% a year ago, or has it been at 5% for three or four years? One imagines that it will evolve over time and be much more prevalent.

Mr. Liam Sloyan

It has grown. The figure is in the report.

Mr. Derek Donohoe

On the rate of growth to date, it has probably moved from 4% to 5%.

While it might mathematically be a 25% increase, it is from a low base.

Mr. Derek Donohoe

Correct.

Fair enough. I accept that online sales are a small part of it, but one looks at Ryanair which went from booking centres to call centres to online booking. It seems to be the way of the world that most people will move online with most things once they discover them. One can go online and register. To do so, one needs to be 18 years of age, but is there any way of detecting if a person inputs a false date of birth? Is there any requirement to provide a PPS number or upload documentation such as a copy of a passport or birth certificate?

I appreciate that if they win they may be caught, because they will turn up and it is clear that they are 14 years of age. However, what happens if they lose? Can they keep losing €75 per day, €300 per week and €900 per month for as long as they like?

Mr. Liam Sloyan

This is something about which we are also engaging with the operator.

Is that possible now?

Mr. Liam Sloyan

It is possible, yes. One of the things the operator does is to carry out checks. In the 2015-2016 period, 2,700 checks or thereabouts have been carried out.

How were those checks done?

Mr. Liam Sloyan

People were asked. They arose when people made winnings, but they provide an indication of-----

So the regulator starts verifying people if and when they win, is that correct?

Mr. Liam Sloyan

It also provides an indication of the extent of people online who are under-age. Of those 2,700 checks, nobody failed to provide evidence that they were adults.

So of the 2,700 checks that were applied to people who had won, every one of them was compliant, is that correct?

Mr. Liam Sloyan

Yes.

So no single person was non-compliant, except that there was a reference to the person who was abroad.

Mr. Liam Sloyan

This was about age.

There were 2,700 checks in relation to age.

Mr. Liam Sloyan

Yes.

Presumably the 2,700 checks were not just dealing with age, but were also dealing with other criteria.

Mr. Liam Sloyan

Identity as well. Age and identity.

How many of the 2,700 checks that have been done in relation to people winning have provided a result that meant they were giving false data to start with?

Mr. Liam Sloyan

It is probably best if we revert to the Vice Chairman on that one, to be sure. I would not want to-----

Okay but is it in the region of 5%, 10%, 20% or 50%?

Mr. Liam Sloyan

My understanding is that it would be very small.

Okay. Is it fair to say that if the prizes are a set percentage, or a minimum percentage that they cannot fall below, and the good causes are a minimum percentage of what is left, the only way the operator can make more money is by increasing the volume?

Mr. Liam Sloyan

Yes.

Other than, perhaps, operational efficiencies in what they are doing.

Mr. Liam Sloyan

That is also an option, certainly. In terms of increasing its income it is the same.

To pay back the big up-front fee.

Mr. Liam Sloyan

It is the same as what it would increase the funds by for good causes.

Mr. Liam Sloyan

Good causes get 65% of tickets minus prizes, from which the operator covers its costs.

So the more money the operator makes, the more money the good causes make. Is that the point Mr. Sloyan is trying to make?

Mr. Liam Sloyan

That is correct.

I know it is correct, but is that the point Mr. Sloyan is trying to make?

Mr. Liam Sloyan

Yes.

I am suggesting that the only way the operator can make more money - and, ideally, for his purposes or their purposes, recover their costs more quickly or generate a better return for themselves in terms of the significant upfront fee that was paid - is to increase volume. They cannot really do it any other way.

Mr. Derek Donohoe

It is a combination of increased volume and increased cost efficiencies.

Okay. They have no scope in the margin because, as we heard from RGDATA, that 6% margin would apply to all other new agents, such as post offices, barbers, bookshops and cafés. I will not say café-bars because lottery tickets cannot be sold on licensed premises. However, that does not stop people sitting in a pub from buying online and potentially losing €75 a day if they wanted to. Is that fair comment?

Mr. Liam Sloyan

According to the controls that are in place for online players, as set out in the licence, if someone chooses to play online they can play anywhere.

Those limits of €75, €300 and €900 are in the Act.

Mr. Liam Sloyan

They are in the licence.

They are in the licence?

Mr. Liam Sloyan

Yes.

So Mr. Sloyan cannot recommend to us - I am not saying he would - that those figures are excessive. The sum of €300 a week would be significantly larger than a lot of weekly social welfare payments.

Mr. Liam Sloyan

Those are the figures that are set out in the licence.

And Mr. Sloyan does not have any discretion over them?

Mr. Liam Sloyan

No.

Deputy Michael McGrath covered the rejected proposals but they were generally-----

Mr. Liam Sloyan

I am sorry, but if I could say something, Senator. When considering approvals for games, we consider all of the controls set out in the licence. For example, we have not just the controls set out in the licence but also other controls that could be put in place. Therefore we have influenced extra controls being put in by the operator to protect players. That is something we will continue to look at when we are looking at the overall risks.

We heard from RGDATA that the age limit is 18 to buy a scratch card or to play lotto, full stop. Is that correct?

Mr. Derek Donohoe

One could be gifted a card as a minor.

Does that 18 years age limit apply to buying lotto tickets or EuroMillions draws?

Mr. Liam Sloyan

Yes.

I know the HSE goes into bars to see if 17 year olds can buy packets of cigarettes and get tokens for machines. Is there any system in place to do that, to see whether or not retail agents of the national lottery are compliant? Are they asking 17 year olds for proof of ID? Are they checking to make sure? Lots of people who look 21 years of age might only be 16 or 17, depending on how they appear. Is any such programme in place? It is done for cigarettes and alcohol, but is it being done for lotto tickets or scratch cards?

Mr. Liam Sloyan

This is an area that we are looking at.

Is it being done currently?

Mr. Liam Sloyan

Currently, it has not been done, no.

Okay. Go ahead.

Mr. Liam Sloyan

Our role is to regulate, monitor and enforce compliance with the legislation by the operator, not the retailers. The way the licence works is that the operator then has requirements on it to ensure that retailers comply with their requirements. We are exploring with the operator how they engage in their oversight role with retailers.

So Mr. Sloyan does not have any oversight role in terms of the retailer, other than through PLI.

Mr. Liam Sloyan

Yes. PLI has requirements under the licence to manage and control the retailers. Under the Act we enforce compliance.

I suppose they are regulating the people who are making them more volume. Is that an appropriate relationship, that they are the regulators of their own agents who are effectively making them more money by however more they sell? Would it not make more sense that Mr. Sloyan and Mr. Donohoe would be the regulators of the retailers?

Mr. Liam Sloyan

Essentially, it puts an onus on us to ensure that the operator is undertaking that part of its responsibility.

Without getting too convoluted, how has Mr. Sloyan fulfilled that onus on him to review the onus on them?

Mr. Liam Sloyan

We monitor all of the systems with the operator. We have oversight of their systems of checking retailers. They have engaged in mystery shopping around other areas.

When Mr. Sloyan says "other areas", what areas would they be?

Mr. Liam Sloyan

For example, around prize-giving and the like.

How would they audit prize-giving?

Mr. Liam Sloyan

Somebody would arrive with a ticket and make sure that the prize was handed out.

Surely if somebody comes with a winning ticket they are going to want the money. What level of risk is there other than fraudulent tickets?

Mr. Liam Sloyan

There is a potential that the person presenting the winning ticket may not know it was a winning ticket at the time when they are presenting it to be validated.

Okay, so Mr. Sloyan may be testing retailers. They may put a ticket through the machine, spot it is a win, keep it and not give it to the person.

Mr. Liam Sloyan

For example, those are the types of checks.

They do exist and are being implemented.

Mr. Liam Sloyan

Yes but there are a range of things. We oversee these type of things that the operator engages in, training, regular reviews with sales reps going to the shops, and reviewing.

Mr. Derek Donohoe

There are requirements on retailers based on the retailer authorisations. We would have an awareness of those authorisations and would see what the controls are that are in place there.

We engage with the operator on its sales managers being on site in all retail outlets and the review that they do when they attend at those sites in terms of the presence of age notification cards and training programmes by retailers. We are aware that the operator is currently updating the latter to provide online training so that shops can update their training. We have a progressive situation that is evolving. In the first instance, the operator has an obligation to ensure that retailers comply. We look at the operator to ensure that the operator's systems are in place to ensure that the retailers are compliant.

Is Camelot a part of the PLI consortium?

Mr. Liam Sloyan

They have a common shareholder.

Does Ireland and the UK have the same operator?

Mr. Liam Sloyan

They are separate companies but share the same owner.

Although the company is new to Ireland their common owner is familiar with lottery operations. Is it reasonable to expect Ireland, as a society, to get similar regulation to the UK? The companies that operate in Ireland and the UK are separate companies but have the same owner. Is it realistic to expect that we will soon have similar regulation? Can we expect to have website information like that produced by Camelot in the UK?

Mr. Liam Sloyan

We work closely with the Gambling Commission in the UK and carry out very similar work.

As Senator Paddy Burke mentioned, the Camelot UK website displays a lot more information than the Camelot Ireland or PLI's website. The entities are similar and have the same owner. Presumably, they use the same terminals and provide the same or a similar suite of games. The company produces all of this in the UK. Is it not reasonable and sensible that we get the same information in Ireland? Is that the aim of the regulator?

Mr. Liam Sloyan

We will look at the information. In view of the submissions made today, we will consider what can be done in the area.

I appreciate that the online business is small. Evidence has been given to me that shows people receive a lot of follow-up emails and reminders when draws take place. Is there a lot of that happening? Is it appropriate for people to be constantly bombarded? Perhaps bombarded is too strong a word to describe what happens when one signs up for an app. Everyone is probably almost immune to online marketing at this stage. Is it appropriate marketing? Private entities conduct lots of online gambling. I am sure they are responsible for the vast bulk of gambling losses in this country. Is it appropriate for people to be bombarded with State-sponsored gambling? Are there regulations that govern how often a person can be e-mailed, sent text message or reminders that games are happening or new games are being launched?

Mr. Liam Sloyan

The important thing is that people can opt out of receiving the messages.

I accept they can opt out but perhaps they do not. Perhaps the people who are predisposed to gambling do not opt out. Is it appropriate for people to receive so many reminders to gamble? Gambling is a serious issue.

Mr. Liam Sloyan

Yes.

As alluded to by other members.

Mr. Liam Sloyan

Yes.

The regulator's office has a member of staff who is responsible for player and consumer protection.

Mr. Liam Sloyan

Yes.

There is a lot of anecdotal evidence on the effects that gambling has on the brain and how it releases dopamine. As a result, some people get a buzz from gambling. Some people are more susceptible to becoming addicted to gambling. Should the issuing of constant reminders be regulated and a limit imposed? Perhaps they should not be allowed at all. Perhaps one should be able to opt into receiving messages rather than to opt out.

Mr. Liam Sloyan

One must opt in to receive the information.

Mr. Derek Donohoe

Players can self-exclude. Where players have difficulties they have an option to self-exclude.

Does the PLI exclude people who play too much or lose too often at the moment?

Mr. Liam Sloyan

The literature would indicate that many addiction issues are about a loss of control. To bar somebody from a site might not be the most effective way to get him or her to address his or her addiction. A more effective way is to assist him or her to regain control by providing information on the range of tools and services available.

Can the terms of the 20-year licence be changed during the period? Are they fixed in stone from the first day the contract is signed until it expires?

Mr. Liam Sloyan

The terms can be changed.

Within what parameters?

Mr. Liam Sloyan

To change a term of the licence the signature of the regulator and the operator are required.

Is it correct that nothing can happen if the operator does not want to change the terms?

Mr. Liam Sloyan

I would not like to rule that out. At the moment we are working with the current licence. We can influence the controls that the operator adopts, as we have been doing, to have extra controls that have not been set out in the licence. We will continue to be able to do so. I see that as a useful way of addressing gaps that need to be addressed.

I have read the annual report and discovered that the income amounts to €1.5 million, which is the fee or licence amount that has been provided by the operator. There was a surplus of almost half that amount.

Mr. Liam Sloyan

Yes.

The office receives €1.5 million per year yet only used between €700,000 and €800,000. Is that a designed surplus? Is the surplus due to not having a full complement of staff? Can the regulator explain the surplus?

Mr. Liam Sloyan

I was appointed two years ago at the end of 2014. At the beginning of 2015 I was the only member of staff but by the end of the year I had six or seven staff.

New staff joined over various months. The average salary looks relatively low if one divides the amount spent on salaries by the many accountants employed.

Mr. Liam Sloyan

Yes.

Presumably many of the accountants were not in the organisation for the full year.

Mr. Liam Sloyan

That is right.

Does the regulator anticipate that when his organisation has the full complement of ten that the surplus will be significantly smaller?

Mr. Liam Sloyan

Yes.

Does the budget produce a particular surplus figure?

Mr. Liam Sloyan

We are looking at a surplus of-----

Mr. Derek Donohoe

The budget for 2017 is approximately €190,000.

There are eight vacancies in the office and ten vacancies have been sanctioned.

Mr. Liam Sloyan

That is right.

What areas are being considered? Reference has been made to a preference for past expertise in the area. Does the regulator anticipate filling the two vacancies? He has said that he is happy with his current team. Does he need more staff?

Mr. Liam Sloyan

The vacancies that we have arose because people left.

Did the office have a full complement of ten staff at one stage?

Mr. Liam Sloyan

We never had ten. We had nine staff at one point. The vacancies are at administrative grades.

In terms of expertise and general professional grades, is the regulator happy that he has a full complement of staff?

Mr. Liam Sloyan

Yes.

Deputy McGrath referred to the ten rejected games. Can the regulator further outline why the games were rejected?

Mr. Derek Donohoe

I am sorry to interrupt.

I mean proposals.

Mr. Derek Donohoe

There were ten proposals that had not been approved. Of those ten as many as four were withdrawn, four were refused and two are still ongoing.

Please tell me about the four proposals that were refused. Four proposals did not need to be sanctioned because they were withdrawn and two proposals are ongoing or were being processed at the time the regulator wrote this report. Perhaps people are good at bringing good proposals to the regulator because the rejection rate is quite small. Four proposals were refused out of approximately 69.

Mr. Liam Sloyan

There are a lot of games. Those proposals do not just relate to games; they relate to others things that require approval under the licence. Many of the proposals would have been amended prior to approval.

What was eventually approved was different from what was first proposed.

Is Mr. Sloyan happy at the increase in outlets from approximately 1,500 when he started? Were they the historic 1,500?

Mr. Liam Sloyan

No. When we started there were 3,700.

Were they the historic 3,700?

Mr. Liam Sloyan

Yes.

As such, the reference to "1,500" is to back in 1986 or something?

Mr. Liam Sloyan

There were 1,500 new ones.

Sorry. It was an increase by approximately 1,500. The 1,500 have all come in since the new operator came in. While they are on the same margin, can they still sell scratch cards as well?

Mr. Liam Sloyan

Yes, but they have a lesser complement of scratch cards.

Can they sell all lotto games? It might be helpful if Mr. Sloyan would write to the committee setting out every game that is available and where. He should include everything that exists, what is available in the new more limited agents, what is available in the full agents, what games are time limited and when they will expire for us to get a fuller understanding. Perhaps not everybody, but a number of us are baffled by the range of games. We have had a good discussion and I thank-----

Before the Vice Chairman winds up-----

It is his third time in, but Senator Burke is more than welcome.

Most of the 21 instant games online are based on scratch card games. However, instant lotto and mini keno are played online and they are more addictive than the games which are based on scratch cards. Mr. Sloyan says that from time to time the regulator employs consultants or experts from around the world to help adjudicate on various things. Have they expressed any view on how some of those games are more addictive than others and that larger problems might be associated with them? It may be that more control is required in relation to something like mini keno and instant lotto.

Mr. Liam Sloyan

There is a range of risk factors that drive the risk presented by a game. They include things like the speed of the game, the odds of a win and things like that. We have assessed all the games we approved with respect to those risk factors, including those two, and those ones were approved.

Are the assessments published from time to time?

Mr. Liam Sloyan

They have not been published.

Mr. Liam Sloyan

That is something we will look at.

One of the key functions of the regulator relates to the control of the national lottery fund and the paying out of grants to good causes. Who decides on the good causes? Is it the Government?

Mr. Liam Sloyan

We pay the money across to the Exchequer and then our involvement ends.

Does that happen once a year or more regularly?

The regulator has no role in the allocation of funds or even the auditing of how it is spent. That has nothing to do with the regulator which is really auditing and regulating the operator.

Is the money transferred once a year or once a week?

Mr. Liam Sloyan

It is transferred every two months.

I thank Mr. Sloyan and Mr. Donohoe for attending our meeting today, for the opening statement and the interaction with members. It was a very comprehensive interaction. We look forward to seeing them again at some stage. It might be helpful if we brought the operator in at some point and discussed how it is getting on in its new role.

The joint committee adjourned at 6.45 p.m. until 9.45 a.m. on Thursday, 9 March 2017.