Lotto operator may struggle to recoup the €400m it paid for 20-year licence
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Punters aren’t the only ones who may feel frustrated at the lack of money coming out of the National Lottery.
The operator of the Lotto could be facing a struggle to recoup the more than €400m it paid to secure the 20-year licence in 2014, according to a trawl of financial records by the Irish Independent.
The operator, Premier Lotteries Ireland, is a consortium that includes An Post, its pension fund, and the Ontario Teachers’ Pension Plan.
Accounts show that Premier Lotteries Ireland has racked up €120m in interest on loans from the consortium since 2014.
Of the €266.2m owed to the consortium at the end of 2020, €104.3m was capitalised interest. That means the interest due has been added on to the total amount of loans owing, rather than being immediately paid.
At the end of last year, €24.8m in loans was owed by Premier Lotteries Ireland to An Post, €28.4m to the An Post pension plan, and €213m to the Ontario Teachers’ Pension Plan.
The shareholder loans are repayable by 2034.
The company operating the lottery also owed €245.8m to a consortium of banks at the end of 2020 and pays millions of euro a year in interest on those loans.
The consortium paid almost €409m in 2014 to win a 20-year licence to operate the National Lottery following a government tender process.
The main Lotto jackpot hasn’t been won since June, drawing political fire. The top prize has been capped at just over €19m since September.
The prize money accumulated each week since then has been doled out to players in the next winning slot, such as those who get five numbers and the bonus number.
The operators of the National Lottery have now sought regulatory approval for a ‘must-be-won draw’ following the controversy.
In a statement provided to the Oireachtas Finance Committee yesterday, Premier Lotteries Ireland chief executive Andrew Algeo said the company wants to introduce a ‘must-be-won draw’ to ensure “an improbably long wait for a capped jackpot win cannot occur again”.
“That would also allow us to provide certainty to Lotto players, as to the latest date on which this record €19m jackpot will be won by,” he added.
Fine Gael TD Bernard Durkan last month questioned why the jackpot has not been won since June.
He blamed the increase in the number of balls used in the draw for the long wait for a winner. The odds of winning the jackpot in the National Lottery’s main draw is one in more than 10.7 million.
“I have never agreed with Premier Lotteries Ireland’s decision to increase the number of balls to 47,” he said.
“I’m old enough to remember 1986 when there were 36 balls and that’s how it should have stayed.”
Representatives from the National Lottery and the Office of the Regulator of the National Lottery are due to appear before the Joint Oireachtas Committee on Finance, Public Expenditure and Reform today.
They’ll be quizzed about how the jackpot could not have been won since June, and on other issues such as the National Lottery’s technology.
“There has also been considerable public discussion about why the jackpot has been capped at €19m since September and not continued to roll over and increase as each draw since failed to produce a winner,” said the committee’s chairman, Fianna Fáil TD John McGuinness.
“The Committee looks forward to hearing answers to these concerns from both Premier Lotteries and the Regulator,” he said.
The decision by Premier Lotteries to seek approval for a ‘must-be-won draw’ for the €19m jackpot is a major political win for Mr Durkan.
Mr Algeo said it is “highly unusual” that this Lotto jackpot still has no winner.
“Given the tickets purchased since early June, the chances are akin to rolling a die 37 times without the number ‘6’ arising,” he said.
“Then again it was somewhat unusual that we had Lotto jackpot winners on three consecutive Saturdays just before this long roll.
“Variation in jackpot roll lengths occur because each lottery draw is a pure game of chance without memory.”
While the National Lottery generated sales of €919m last year, and a so-called operating profit of €14.6m for the consortium behind it, Premier Lotteries Ireland made a pre-tax loss of €22.3m after it accounted for its huge loan interest bill.
The shareholders, including An Post, are reaping a massive 9pc interest on their loans to Premier Lotteries Ireland every year.
Such high interest rates are not uncommon for loans given by shareholders to companies they control.
Accounts for the operator show it paid €15.7m in interest in 2015 on loans from its shareholders, bringing the total shareholder loans owed by the company to €184.7m at the end of that year.
The National Lottery said earlier this year that since its inception in 1987 it has raised €6bn for good causes. The money has been paid out via grants to thousands of projects, clubs and organisations in communities all over the country, it said.
“The company generated operating profits of €14.6m in 2020 and closed out its financial year with a strong cash position on its balance sheet of €85.6m,” said a spokeswoman yesterday.
That cash included €28.5m relating to money held for prizes and €8.6m relating to online customer account balances and retailer deposits.
Premier Lotteries Ireland did not say if it’s satisfied the consortium will generate a positive return on the more than €400m it spent to secure the licence.
