Thursday, 20 June 2013

Ceisteanna (5)

Mary Lou McDonald


5. Deputy Mary Lou McDonald asked the Minister for Public Expenditure and Reform if following the recent launch of the competitive process of the new National Lottery licence if the current level of good causes funding will be maintained. [29865/13]

Amharc ar fhreagra

Freagraí ó Béal (11 píosaí cainte) (Ceist ar Public)

Under the next national lottery licence, annual contributions for good causes will be set at 65% of gross gaming revenues. Gross gaming revenues are defined as the level of sales less the amount deducted for prizes. The current licence does not have a specific formula in place under legislation for good causes. The level of contribution is the amount remaining when prizes and costs are deducted from the value of total sales. It is worth noting that the level of returns for good causes from the national lottery has been falling in recent years. Under the next licence, the national lottery operator will be well placed to reverse this trend and boost the level of sales of national lottery tickets. This increase will be facilitated by the terms of both the next licence and the National Lottery Act 2013, which we passed in this House and the other House, and will offer the holder of the next licence greater flexibility for the growth and development of lottery games and distribution channels, including interactive channels. However, it is important to emphasise that this will be achieved in a responsible manner, as we have debated at some length, which protects the interests of national lottery players and the long-term sustainability of the lottery itself.

I am very confident, under the new arrangements, that the level of annual returns for good causes, which include sport, culture, community health and the natural environment, will grow significantly from the 2012 amount of €225 million. The outcome will be funding for more worthwhile projects in more places across the country.

I should also point out that the successful bidder for the next licence will make an upfront payment to the State in return for a 20-year licence. Part of this up-front payment will be used to fund the construction of the new national children’s hospital. In addition, some moneys which will accrue from the payment in respect of the national lottery licence are being allocated to help fund Exchequer capital projects this year and next year.

I thank the Minister for that answer. He has set out that under the new licensing arrangement, 65% of gross gaming revenue will be directed towards good causes. What I am trying to establish is a certainty that the level of funding for good causes will not be damaged by the new regime, which, as the Minister knows, I opposed in the course of our debates. We will not open that up again. The Minister told us that last year the figure for good causes was €225 million. Can he tell us whether his Department has run figures based on the revenues from last year and whether he is satisfied that that figure will be matched, if not surpassed - in other words, that that is the correct formula with which to move forward?

In respect of the up-front payment, I know the Minister cannot speculate as to what that figure might be and therefore I will not ask him for a bald figure, but I ask him for an assurance that a large up-front payment will not be used by a bidder as an incentive for the system to perhaps be a little slack in terms of the other terms and conditions of the licence. I invite the Minister to comment on that.

No. The Deputy makes a number of valid and fair points. This is a balance that I and the Government have sought to strike in terms of maximising the upfront payment without damaging the constant annual flow of money for good causes. It is our estimate that we can increase the volume and flow of money for good causes. All of these are theoretical until we see the structure of the new licence at work, but we have taken the best advice. We have looked at operations internationally. The nature of the lotto is changing. For example, for scratch cards, which are a chunk of the lotto, the prize fund is much bigger and therefore the actual sum accruing to good causes under the current regime from scratch cards is not great. There is no limit to the prize fund under the current legislation. We are looking, in the round, at a robust system. I picked a figure of 65% for good causes, which is considerable.

There would have been suggestions from some of our advisers that we go for a lower figure that would ensure we would get a bigger upfront payment but I was willing to take a smaller upfront payment if it meant we would have a good growing annual fund for the good causes that are so important into the future.

I agree with the Minister and I welcome the confirmation that there will not be any possibility of a trade-off between a larger upfront payment that might cause damage to that revenue stream for good causes.

I had asked in a parliamentary question that the new formula be applied to the most recent revenue figures we have for the national lottery, although I appreciate that the contingencies of increases or decreases in sales must be taken into account, such are the vagaries of the market. It would be very useful to see this formula applied to the most recent sales figures for the national lottery so we can see the maintenance of the revenue flow. I submitted a question on that to the Department and received an unsatisfactory answer; it had a lot of interesting information but it did not answer the question. For those of us who are concerned about the national lottery, particularly the funding for good causes, it would put our minds at rest if the Minister's officials could take the known data from the most recent period, apply the 65% of gross gaming revenue formula, and show us the figure so we can see if it tallies with the €225 million figure.

I have done that in another question and I am looking for it now. It is not a direct comparison, because things will be different over time.

It is Question No. 22.

Is that where it is? Unfortunately I did not bring Question No. 22 with me, I did not expect to reach it. I might have it in my own notes. If we applied it precisely to the revenue declared for last year, when the good causes contribution was €225 million, it would have been of the order of €214 million. Given the nature of the gaming, my advice is that this is a much more robust formula than the 30% I had intended to put in.

Applying that formula gives a figure that is €11 million less.

For last year, yes.

That is all the more reason why the terms and conditions of the licensing arrangement must be robust. If we are to move into this new arrangement, which I continue to oppose, all the more reason for the Minister to ensure there are strong incentives to grow the business. It would be a slap in the face if we were to be down €11 million for the good causes next year. I urge the Minister to ensure that is not the case.

I fully accept what the Deputy is saying. I do not want to be prescriptive about this but I must strike a balance. I do not want to grow the national lottery at the expense of those who might be spending money they should not be spending. There are checks and balances all the way. I am advised that it is possible under this structure in a way that does not impact negatively on people who should not be gambling too much to grow from the current position to a contribution to good causes of €300 million over a period of five or six years.