Despite global economic crisis NLCB continues to fatten Treasury

Between 2008 and 2011, the National Lotteries Control Board (NLCB) has made total contributions to the Treasury of $802.5 million despite the slowdown in T&T’s economy. But, as profits have increased, so, too, has the problem of illegal gaming, which is tearing into the NLCB’s profit margin by ten per cent or $100 million over this period. NLCB chairman Mitra Mahabir and board member Brian Sawh spoke to Business Guardian to highlight this ongoing challenge. 

 

 

The problem of illegal gaming prompted the NLCB to contact outgoing Commissioner of Police Dwayne Gibbs and to write a letter to National Security Minister Jack Warner requesting assistance in dealing with this problem. According to Sawh, illegal entities have created a computerised system and run it alongside the NLCB’s. “The reason why they (the illegal entities) are taking market share is that our regular payout is $24:$1 and we run promotional games, while the illegals pay $30:$1 every day. The reason why they can do that is because they have no production costs, they have no contribution to anybody. We carry the burden of running the game but they are piggybacking off of it and we are seeing a significant drop. We are starting to see trends of drops of ten per cent in different months. What we are doing is fighting it with new promos,” he said. With televised draws and high-tech equipment, it makes it easier for the illegal entities to exist. The penalties are stiff and swift and have been increased to $250,000 but no one has been charged.

 

 

Regulation and enforcement are the ideal solutions to fix this problem. “Quality enforcement is the only thing that would help this problem. In order for people to be charged, the police will have to be policing the system. As long as people are penalised constantly and consistently, it is going to make a dent on it,” he said. Despite the problem of illegal gaming, projections for the year ended September 30, 2012, indicate that NLCB is expected to make a profit of more than $262 million. Chairman Mitra Mahabir, commenting on the results, said, “Up to the nine-month mark, we were ahead of budget and we are looking at transferring to the Treasury a surplus in excess of $262 million for the fiscal year ended 2012. If we compare that to the performance that we met when we came here—we came on board in October 2010—the performance at the end of 2010 was $206 million. At 2011, we transferred $228 million which was an increase of about ten per cent.” Comparing 2011 revenue with 2008, there was a 39.9 per cent increase in revenue. Asked what contributed to the increase, Mahabir said it was due to increased communication between NLCB’s management and the agents.

 

 

“We changed the whole marketing perspective of the organisation and started to move with a more interactive method of communication with the public. We started to target new demographics, in a smaller level, this was all part of our strategic thinking, which was contained in the strategic plan. We also engaged in promotional items, giveaways and so on, rather than traditional advertising. We embarked on more community-support sponsorships,” Mahabir said. Whether it is Chutney Soca Monarch, community news or a court matter, NLCB has been making the headlines constantly, but Sawh said the management team is not daunted by being in the spotlight. “An organisation like this has become very dynamic so we may always have our critics in different quarters. Even though we have been increasing our revenue, we have been doing it in a very responsible fashion. We do understand that we are in the business of gaming. We (the board members) have a good working relationship with the management,” he said. When the board members took up their appointment in October 2010, Mahabir said one of their first tasks was to ensure that the operations of NLCB were “aboveboard and can withstand any kind of scrutiny.” “We met an organisation that hadn’t been audited since 2001. We put a lot of focus and emphasis on getting the Auditor General to come into the NLCB to audit us and bring us up to current 2010 and 2011, Mahabir said.

 

 

To date, the Auditor General has completed up to 2009 and the board is now hoping that 2010 and 2011 can be completed by the end of 2012. By law, all the profits from the instant games, the scratch games, go to the Sport and Culture Fund. The revenue earned from the online games, such as Play Whe and Pick Two, goes to the Consolidated Fund. “Play Whe is our largest portfolio, as it constitutes about 67 per cent of our revenue. It is embedded in our culture, and was derived out of the whe whe, which is a major competitor with Play Whe right now.” The slowdown in the economy is not causing the NLCB’s clientele to hold back. In fact, Mahabir said trends are showing upward movement. “When we look at sales, they are trending up, in spite of Play Whe probably going downward (due to illegal gaming). This shows that it is being supported. When you look at the cost of a Lotto ticket or the cost of playing Play Whe, it’s not very significant. The whole lottery industry thrives on the fact that people are investing in a dream.  “When one buys a lottery ticket for $2.50, he can win a million dollars. They are really investing in a dream.

 

 

“History has shown that when economies are not doing as good, you find products like the lottery continue to sell, as people look to it as a solution to their financial woes,” he said. Workers within the lower income bracket are a major part of their market. “Seventy per cent of the players who play Play Whe are winners. We have created millionaires. When our revenue is $2 billion for instance, 70 per cent of that goes back as winning prizes, so there is a high percentage of wins. We only retain 30 per cent.” Asked in which area of T&T there is more participation in the games, Mahabir said, “In terms of the geographic areas, I think the densely-populated areas would show higher sales, like Chaguanas and Port-of-Spain. But we think it’s only fair if we offer our games throughout T&T. Naturally, you would have some agents who are not producing as much sales as would the agents in high-density areas.” The aim is to encourage more people in the 21 to 40 age group to participate in the games.

 

 

“The older people are the ones who are engaged in Play Whe because you know it’s a cultural thing where they attach some symbols to numbers. The younger people are more involved in the Lotto and scratch games,” he said.

Demand for instant games has increased. “The sale of instant tickets has gone up by 58 per cent within the last month,” he said. The next step for NLCB is to have gaming as an application on the participant’s cellphone. The details have not been worked out. Mahabir admits that “he wasn’t very high on the learning curve” but had to hit the ground running when he came in. Mahabir has sat on several boards in the private and public sectors and he is also a business consultant in the area of international business logistics for a few companies. He also served as general manager at Laparkan Shipping and more recently, managing director at Alston’s Shipping. Mahabir is an aircraft engineer by profession and worked for several years as the vice-president of procurement and materials at British West Indian Airways (BWIA), which is now Caribbean Airlines.

 

 

YEAR CONTRIBUTION TO	CONTRIBUTION TO  THE TREASURY (million)
2008	163
2009	205
2010	206.5
2011	228
2012	262 (projected)