Dutch Government Blocks SMS Lottery

3 September 2003

The world's oldest state lottery is in disarray.

The Netherlands understate secretary of finance last week denied the Dutch state lottery, "Staatsloterij," permission to launch its new SMS lottery product, "Sevens," a project that cost 7 million euro to develop.

Making matters worse, the Dutch Gaming Board has heavily criticized Staatsloterij for spending 20 million euro more than it did in 2001 without increasing turnover. Further, the Dutch good causes lotteries are alleging that Staatsloterij is guilty of unfair competition.

Established in 1726, Staatsloterij is licensed by the Department of Finance in agreement with the Department of Justice. Staatsloterij has a monopoly, and only one license can be issued. At least 60 percent of turnover must be paid out as prize money; the net profit is remitted to the exchequer.

Novamedia runs the three Good Causes Lotteries, which are licensed by the Department of Justice: the BankgiroLottery; the PostalcodeLottery; and the SponsorLottery.

Under the main regulations, a license can only be given if the profits serve purposes of general interest (charitable purposes). At least 60 percent of the turnover must be destined for these charitable purposes. (The total costs related to organizing a lottery may, thus, not exceed 40 percent of the turnover.)

Staatsloterij attributes its rising costs to the launch of a new weekly betting product called "Dayzers," the introduction of new terminals and a legislative change affecting the recording of annual reports (necessitating an extra, legally needed reserve).

However, the Dutch Ministry of Finance has become the financer of new gaming products and has, in the meantime, forbidden the new SMS lottery. The justice minister declared at the start of the new Dutch government that mobile betting is not a part of the recent cabinet policy. The policy also squelched considerations of further privatization of the Dutch lottery.

Meanwhile a study has been commissioned on the demand and need for more charitable lotteries in the Netherlands. Depending on the outcome, the number of licenses for national charitable lotteries could be increased. Under the new legislation, conditions for running existing and new lotteries will be harmonized. This means that the charitable lotteries and the state lottery will in due time operate under more or less the same conditions. However, also in the future the net result of the state lottery will go to the state treasurer. And the state lottery will keep its special position as a lottery with a high payout percentage as well as its status as a state-owned operator. For the charitable lotteries, the obligated destination to the good causes of 60 percent of turnover will be lowered.

Despite the discouraging news, Arjan van't Veer, a spokesman for Staatsloterij, believes it's still possible that "Sevens" will get a license.

"The Dutch Ministry of Finance will raise objections to the decision of the Dutch Ministry of Justice," van't Veer explained. "With a more detailed motivation, we will have a good chance. And above that the Dutch De Lotto (the Dutch sports betting monopoly) already got a license three years ago. And what is sauce for the goose should be also sauce for the gander."

Comparison of the State Lottery and Good Causes Lotteries, 1999-2002

Turnover
StateLottery: a 20% rise (to 689.5 million euro in 2002).
Good Causes Lotteries: a 32% rise (to 477.3 million euro in 2002).

Prize Money
State Lottery: between 65% and 67%.
Good Causes: between 21% and 23%

Costs
State Lottery: a 108% rise (1999:13 % of the turnover; 2002: 22% of turnover).
Good Causes: a 32% rise (continuously 17-18% of turnover).

Remittance
State Lottery: a decrease from 20% of turnover in 1999 to 12% in 2002.
Good Causes: continuously at the legal minimum of 60%.

State Lottery Key Financials in 2002

  • A 4.7 % rise in turnover to 689.5 million euro.
  • Remittance to the exchequer dropped by 31.2% to 82.2 million euro.
  • Operational costs climbed from 110.7 million euro in 2001 to 153.6 million euro in 2002.
  • The Gaming Control Board advocates an average remittance fee of 25%; however the remittance of the state lottery decreased 18% in 2001 to 12% in 2002.



Rob van der Gaast has a background in sports journalism. He worked for over seven years as the head of sports for Dutch National Radio and has developed new concepts for the TV and the gambling industry. Now he operates from Istanbul as an independent gambling research analyst. He specializes in European gambling matters and in privatizations of gambling operators. Rob has contributed to IGN since Jul 09, 2001.