Where have the lottery millions gone? - Monday 4th of June 2007

Its been said that, statistically, one has a greater chance of being struck by lightning than of winning the national lottery. But every week, millions of people buy millions of rands worth of tickets. As one regular player told the Mail & Guardian Online: "I know I wont win the R22-million, but I might win the R22-million."

But since the suspension of the national lottery in March this year, the estimated weekly average of R10-million spent on tickets and R2-million to R3-million spent on Sportstake -- the lotterys soccer betting game -- has not been near a ticket counter. So how much of that money is now being channelled into other betting ventures?

"The jury is out on this issue," says Professor Peter Collins, of the National Responsible Gambling Programme (NRGP). "It is an issue which is being systematically researched in South Africa and internationally."

However, money generated from Sportstake, in particular, has already found its way to ventures such as the Soccer 6 game owned by Phumelela Gaming and Leisure, which asks players to forecast the results of soccer matches. Sportstake and Soccer 6 are played on local and international matches, and they follow a similar pattern.

"Turnovers [from Soccer 6] have risen sharply in the wake of Sportstake being suspended since around the end of March," says Robert Garner, spokesperson for Phumelela.

In the month before its suspension, Sportstake made more than R3-million a week, while Soccer 6 made R900 000 during that soccer season.

Over the past two months, the revenue for the Soccer 6 local league game averaged R1,4-million, and more than R1-million for the United Kingdom league game.

"A sizeable number of Sportstake customers migrated to Soccer 6 in the closing weeks of the soccer season," Garner says. "And obviously we did focus Soccer 6 marketing on recruiting new customers from the ranks of Sportstake customers."

Traditional players

According to experts, traditional lottery players wont necessarily migrate as rapidly to other forms of gambling such as casinos and slot machines.

"Probably a small percentage of lottery players will now transfer their custom to other forms of gambling, but this is not likely to be more than 10% of total lottery spend," says the NRGPs Collins.

He estimates that since the lottery suspension, between 5% and 15% of past players would have tried their luck at other games of chance, such as sports betting and horseracing. These would most likely be players who buy scratch cards.

"Between 70% and 80% [of those who are able to] play the lottery once a month or more, while only about 35% regularly gamble at casinos, on horses and other forms of gambling," Collins says, explaining the differences between lottery players and other gamblers.

"The lottery is mainly about fuelling fantasies of becoming mega-rich, while casino players are, like roller-coaster riders, more interested in the excitement of the game."

He says the lottery is also more geographically and financially accessible to most South Africans. "There are far more, and far more widely disbursed lottery outlets; and playing slot machines costs between R100 and R200 per hour, while buying half-a-dozen lottery tickets twice a week (which is heavy play for the lottery) costs R30 per week."

Information from the Casino Association of South Africa (Casa) backs up this opinion. There are no statistics to indicate an increase in casino traffic since the suspension of the lottery, says Derek Auret, CEO of Casa. It will not have a significant impact, he feels, because "it is a different market entirely".

Phumelela Gaming also runs bets on horseracing, which Garner says has been increasing steadily, although the reasons for this could vary.

"Its impossible to measure what percentage of that increase, if any, can be attributed to the suspension of the national lottery," he says. "Given the different nature of betting on horseracing as opposed to playing the lottery, its unlikely that horseracing betting turnovers have benefited significantly from the lotterys suspension.

"But its feasible that some lottery players are now playing the big-payout bets in horseracing like the Pick 6 and Quartet, while those who played both the lottery and the horses previously are now probably spending more on horseracing bets."

Return of the lottery

This week, Minister of Trade and Industry Mandisi Mpahlwa was to announce the plans for the reinstatement of the suspended national lottery. On Friday, his department said in a statement that that the National Lotteries Board had delivered a report containing its recommendation regarding

the awarding of the lottery operating licence. Mpahlwa will now have to study this report before making a decision on the licence.

However, Garner is not worried about any possible reverse effects the lotterys return could have on Phumelelas revenue.

"We do not believe the reinstatement of the lottery and the lotterys soccer bet will impact negatively on either horseracing or Soccer 6 betting turnovers," he says. "The competition offered to Soccer 6 by Sportstake was good for business and has assisted enormously in growing the soccer betting market."

But Collin adds: "If those who have switched from the lottery to other, presumably less preferred forms of gambling, are again able to buy lottery products, they will presumably switch back."

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