Lottery: Revenues up, profitability down

Anand Prince

'' Put warning messages on lotteries too, '' experts demand

Representative Image / Illustration: Shameesh Kavungal, Mathrubhumi Online

“The lottery might sound like a source of entertainment for some of the states, but for Kerala, it is the backbone of its economy,” reads the text on a web page titled Revenue Collection, under Kerala State Lotteries Department’s official website. “Kerala Lotteries, the government-run lottery business that contributes to the state’s coffer always better its revenue collection than the previous years,” the text continues. The web page also offers data on profit and revenue earned by the government from 1967 to 2022 through lottery sales.

Even as Covid-19 pandemic year (2020-2021) witnessed a phenomenal reduction of revenue and profit from lottery sales, it provided 66.50% of the total non-tax revenue of the state, shows Kerala State Planning Board’s Economic Review 2021. Hence, there is no surprise that the government is tempted to milk the revenue from the lotteries. The decision to increase Onam Bumper lottery ticket’s prize money and price comes as a part of this pursuit. The ticket rate has been increased from Rs 300 to Rs 500, while the prize money (first prize) is doubled from Rs 12 crore to Rs 25 crore. The other prizes are also hiked. The government is also seen marketing the Onam Bumper lottery with great fervour.

Experts discuss economic and psychological aspects of lotteries amid Onam Bumper bandwagon

According to experts, the government being the sole operator of lotteries in the state, it is advisable to have some radars in place while experimenting strategies for revenue generation.

Dr Biju AV

Dr Biju AV and Moni Mavillasery, under the commerce department of Kerala University, who have academic interest in the topic detailed about different economic aspects pertaining to Kerala lotteries.

It is better to have a scientific framework right from pricing of the lotteries to fixing of its prize monies. Even the welfare activities funded by lottery revenue should be reviewed.

More often it is difficult for a commoner to understand why a winner has to forgo nearly 40 per cent of the prize money in the form of tax, commission and bank charges. For instance, if the prize money is Rs 10 crore , then the winner will only get Rs 6 crore. Any person who has won a prize money worth Rs 10,000 is liable for Centre’s tax. Apart from this the government has been charging 12 per cent on the sales price of the ticket. It is quite clear that state-central governments are not just getting profit from lottery sales, but also taxes.

Moni Mavillasery

Lotteries have societal benefits. Winning a lottery is a handy affair for people in lower strata of the society. The lottery revenue has been used for various welfare activities. Moreover, lottery sales are a source of livelihood for many including differently-abled and other individuals who find it difficult to be engaged in some other works. Having said that, it is important to have a look at the commission and other benefits that distributors and sellers get.

Though data on profit and revenue put up glossy images, the data on profit on revenue reveals that profit on revenue has been declining. The revenue pooled from lottery sales goes for multiple allocations. Let say: 50 to 60 per cent has to be allocated for prize winners; 5 to 10 per cent will be for agents; 10 to 15 per cent will be for meeting expenses like fees, salaries, ticket printing, and advertisements. Data shows these allocations are significantly compromising profit percentage. It may be noted that profit on revenue which was at 23 per cent in 2015-16 period plummeted to 8 per cent in 2021-22 period.

Dr Sanju George Chackungal, consultant psychiatrist at Lisie Hospital, Ernakulam shared his perspectives on the topic. Dr Sanju ,who has both clinical expertise and research background in lottery addiction says : “the message that 'lottery addiction is potentially harmful like alcohol addiction which needs a specialist's intervention' should reach the public”.

Dr Sanju George Chackungal

Dr Sanju explained the context.

If a person devotes a small portion of income for the lottery it may not be problematic. But, if a person with a daily income of Rs 800 is spending Rs 600 for the lottery, then that is an issue. Some even borrow money from others to purchase lottery tickets. The problem is similar to alcohol addiction and lottery addiction is a type of behavioural addiction.

We have warning messages on alcohol bottles and cigarette packets, but not on lotteries. That is a major concern. The advertising of lotteries also needs to be considered. Even ads on online rummy come with statutory warning. But the statutory warning messages are missing when the government itself advertises the lottery. Being the sole operator of lotteries in the state, the government should be more responsible.

It is true that lottery purchase is a form of legal gambling in Kerala. Also, it gives revenue for the government and it will not be practical for an administration to forgo that. However, the way the lotteries are sold needs reflection. Do we have any age/location restrictions and purchase limits similar to alcohol and tobacco products? The answer is no.

Representative Image / Photo: Praveen KK

Dr Jose Sebastian

On the other hand, some sellers have been resorting to measures like begging and gas lighting. Though it may sound Utopian, the ground realities call for mentoring of sellers too. There should be a policy debate over the matter. Every nook and corner we can see sellers. One interesting phenomenon is that many lottery sellers use bars and BEVCO premises as their target location. The objective is to tract tipplers who are in inebriated condition. Bar/Bevco, pan shop and lottery selling point in some areas are functioning like a tri-junction for addiction. We must realise that one addiction is a ticket to another addiction.

Data insights

Onam Bumper: Last time 54 lakh onam bumper tickets were printed and all of them got sold. This year the department can print a maximum of 90 lakhs. As of now, printing of 30 lakh tickets has been completed and 25 lakh tickets have been sold. If all 90 lakh tickets get sold, then the probability of winning Onam Bumper first prize is 1/90 lakh.

Lottery sales: Noted economist Dr Jose Sebastian in his book ‘Kerala dhanakaaryam: Jnapashathuninnu oru punarvayana’ (page. 47, IECED, Thiruvananthapuram) has ranked Kerala districts based on per capita lottery sales from 2009-10 to 2016-17. The ranking was done based on the data from the lottery department. According to that, per capita sales are more in districts like Kannur, Kottayam, Palakkad.

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