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FactCheck: Is the National Lottery correct to say it exists 'for the sole purpose of raising money for good causes'?

It made the claim in a press release following the release of a gambling survey last week – but is it correct?

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LAST WEEK, A major piece of research into gambling was published and it showed that lottery and scratch cards were by far the most common way people gamble in Ireland.

According to the gambling prevalence survey – published on Wednesday by Ministers of State David Stanton and Catherine Byrne – 56.7% of people in Ireland had a bet on a lotto or bought a scratch a card in the past year, with 35.4% doing so in the last month.

In response to the publication of the data, the National Lottery issued a statement.

It said: “The National Lottery differs from other forms of gaming in that it is based on many people playing, but spending reasonably small amounts.

We exist for the sole purpose of raising money for good causes all over Ireland – whilst offering the people of Ireland fun, responsible play.

“Nearly 30c in every euro spent on National Lottery games goes back into the areas of youth, sport, recreation & amenities, health & welfare, arts, culture & national heritage and the Irish language.”

But is this claim correct? Does the National Lottery exist for the sole purpose of raising money for good causes?

The evidence

The National Lottery was established by the government in 1986, began trading in 1987, and was initially owned by An Post.

When set up, its purpose was to provide funding for “sport and other recreation, national culture (including the Irish language), the arts and the health of the community”. 

However as the recession laid siege to the national finances in the early 2010s, the government put the licence to operate the National Lottery up for sale.

It was eventually sold to a consortium made up of the Ontario Teachers’ Pension Plan, An Post and the An Post pension funds.

Under that agreement, a private firm ultimately co-owned by the trio, called Premier Lotteries Ireland, was awarded a 20-year licence in 2014 to operate the National Lottery.

The Canadian pension fund ultimately controls the majority of Premier Lotteries Ireland’s shares, with An Post and its pension funds holding minority stakes.

The relevant legislation was updated with the National Lottery Act 2013, which replaced the previous laws and established a regulator to oversee the lottery.

Premier Lotteries Ireland paid the government with an upfront sum of €405 million to secure the contract.

The licence to operate the National Lottery stated that Premier Lotteries Ireland had to allocate 65% of its gross gaming revenue – made up of its total ticket sales minus prize money – to good causes each year.

It was also required to provide regulators with a statement containing details of its contributions to those causes – which includes funding for many small, community organisations – for every 12-month period.

According to Premier Lotteries Ireland’s most recent financial statements gross ticket sales amounted to €800 million in 2017. The company paid out €452 million in prizes to players, representing around 56% of its total ticket sales.

More than €226 million was distributed to good causes, representing the 65% share of gross gaming revenue that the State licence required the company to hand out to worthy initiatives.

That left Premier Lotteries Ireland with an operating profit of €17.4 million – after its running costs, including staff expenses and other overheads, were stripped out.

However due to financial expenses of €31 million, the company posted a net loss of €13.5 million for the year. The largest portion of the financial expenses came from interest due to ‘related parties’.

Elsewhere in the accounts, the company noted that it had more than €220 million in loans and accrued interest outstanding to its parents: the pension funds and An Post. These loans incurred a hefty 9% rate of fixed interest.

Without the interest charges to Premier Lotteries Ireland’s owners, the company would have delivered a slender profit for the year.

In addition, An Post delivered services worth €2.2 million to Premier Lotteries Ireland – which it part-owns – in 2017, while another firm called Camelot provided “systems implementation and support services” worth €9.7 million during the year.

Camelot runs the UK national lottery under licence and it is also owned by the Ontario Teachers’ Pension Plan.

Meanwhile, Premier Lotteries Ireland’s ultimate parent company in Ireland paid out its first dividends to shareholders of €84.6 million in 2017.

So between the dividend payout and intra-group charges, the National Lottery’s licence holders benefited by more than €96 million from the operation of the service for the year.

Canadian owners

The Ontario Teachers’ Pension Plan – Premier Lotteries Ireland’s majority owner – describes itself as “Canada’s largest single-profession pension plan with $189.5 billion in net assets”.

Under a section describing “our investments” on its website, the fund says: “Our investment program has one goal: to earn the best possible returns, at an appropriate level of risk, to pay pensions to our members.”

That means that the company responsible for running Ireland’s National Lottery is itself majority-owned by a Canadian investment firm.

Lottery statement

We asked the National Lottery for a statement based on the claim in question for this FactCheck.

A spokeswoman told us: “The National Lottery was set up on a statutory basis by the Irish Government, under the National Lottery Act 1986, with the express purpose of raising funds for Good Causes all over Ireland.

This did not change when Premier Lotteries Ireland (PLI) was granted a 20-year licence to operate the National Lottery in 2014. PLI is a consortium made up of the Ontario Teachers’ Pension Plan and An Post and An Post Employees’ Pension Fund. It is important to point out the difference between PLI and the National Lottery. PLI is the vehicle which operates the National Lottery.”

The spokeswoman added that since 1987, around €5.4 billion had been raised for good causes through the National Lottery.

Some 91c of every euro spent on National Lottery games went either to good causes, prize money or retailer bonuses and commissions, she noted. The remainder went towards paying for Premier Lotteries Ireland’s operations and any profits.

Verdict

The claim made by the National Lottery was that it “exist[s] for the sole purpose of raising money for good causes all over Ireland – whilst offering the people of Ireland fun, responsible play”.

As shown above, however, the company that operates the lotto – Premier Lotteries Ireland – is majority-owned by a Canadian investment firm which promises to deliver returns for its members.

It is true to say that the company provides hundreds of millions of euro in funding for good causes each year, while it also pays out hundreds of millions of euro in prize money. 

However it is also a business which seeks to make money and pay its shareholders: which it did to the tune of more than €84 million in dividends in 2017.

Which means that, while the National Lottery does indeed raise hundreds of millions for good causes, it also functions as a cash-generating asset for its owners.

PLI, the operators of the National Lottery, does draw a distinction between the National Lottery and themselves as operators of the National Lottery but that distinction ignores the reality that the gambling by the public on the National Lottery funds both the National Lottery and the operator PIL, and therefore the National Lottery (funded by this public gambling) cannot truly claim to exist ‘for the sole purpose of raising money for good causes’. 

As a result, we rate this claim: Mostly FALSE

As per our verdict guide, this means the claim contains an element of truth but is missing critical details or context. 

Based on the information set out above, the National Lottery may have been set up with the goal of raising money for good causes, but it also serves as an income-generating asset for its licence-holders and therefore can not be described as existing for the “sole purpose” of raising money for good causes.

TheJournal.ie’s FactCheck is a signatory to the International Fact-Checking Network’s Code of Principles. You can read it here. For information on how FactCheck works, what the verdicts mean, and how you can take part, check out our Reader’s Guide here. You can read about the team of editors and reporters who work on the factchecks here.

With reporting from Peter Bodkin 

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Sean Murray

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