National Lotteries Board Portfolio Committee Briefing October 2004

Agenda Background Organisational Structure Financials Activities

Vision/Mission To be a world class regulator and distributor of lottery funds To ensure that that the national and other lotteries are run with the utmost integrity, that the interests of all players are protected, that the national lottery generates maximum revenues for good causes in a responsible way and that these revenues are disbursed expeditiously VISION MISSION

National Lotteries Board Nora Fakude-Nkuna Shelley Thomas Astrid Ludin Henry Makgothi Nornan Axten George Negota Joseph Foster

The National Lotteries Act Establishes the National Lotteries Board Sets up the process for awarding the licence Establishes the National Lottery Distribution Trust Fund (NLDTF) Sets up the process of Distribution Sets up process for Monitoring & Regulating –Private & Society Lotteries –Promotional Competitions

Functions/Objectives Advise the Minister –on the issuing of Licence/s –on the percentages allocated to good causes –on the efficacy of Legislation related to Lotteries Protection of Players Maximize proceeds to good causes Administer NLDTF Monitor & Regulate Other Lotteries Manage the Central Applications Office

Uthingo NLB NLDTF DA Charities DA Art & Culture DA Sport DA RDP DA Misc 22% 36% 22% 5% 15% Weekly transfer Central Applications Office REGULATOR Monitors activities & approves games NGOs CBOs Applications Allocation and distribution of funds (average turnaround time is 3 months) Structure Operates the National Lottery

Organisational Structure

National Lotteries Board’s Equity and Gender

Financial Statements

NLB Balance Sheet as at 31 March 2004 ASSETS Non-current assets Property, plant and equipment Intangible assets Current Assets Trade and other receivables Investments Cash and cash equivalents Total assets EQUITY AND LIABILITIES Reserves: Retained earnings Non-current liabilities Deferred income: Licence fees Current liabilities Accounts payable Provisions NLDTF assistance Total equity and liabilities

Revenue Operating costs Operating deficit before finance costs Finance costs Operating deficit Investment income Deficit for the year ( ) ( ) (766) ( ) ( ) ( ) ( ) (3 101) ( ) NLB Income Statement for the year ended 31 March 2004

ASSETS Current Assets Accounts receivable Investments Cash and cash equivalents Total assets EQUITY AND LIABILITIES Capital and reserves Retained earnings Current liabilities Trade and other payables Total equity and liabilities NLDTF Balance Sheet as at 31 March 2004

Revenue Finance income Other income Disbursement of funds Assistance to the National Lotteries Board Other operating expenses Net surplus for the year ( ) ( ) (14 399) ( ) ( ) ( ) (13 717) ( NLDTF Income Statement for the year ended 31 March

Budget 2004/ / /2007 Income Grant 24,544 25,924 28,037 Expenditure 20,738

Cost/Disbursement Ratio NLBUKNDA

Activities Regulation –National Lottery –Other Lotteries & Promotional Competitions Distribution of NLDTF

Uthingo NLB NLDTF DA Charities DA Art & Culture DA Sport DA RDP DA Misc 22% 36% 22% 5% 15% Weekly transfer Central Applications Office REGULATOR Monitors activities & approves games NGOs CBOs Applications Allocation and distribution of funds (average turnaround time is 3 months) Structure Operates the National Lottery

Regulating the National Lottery Retail Outlets Payments to the NLDTF Copyright and Trademarks Player Relations Advertising Security Systems Banking and Record Keeping Payment Security Ancillary Activities Directors, Shareholders and Subcontractors Social Responsibility

Salient Lottery facts for the year ended 31 March 2004 Prize Winners Millionaires Rollovers Highest Jackpot Highest Prize Average Number of Players Per Week Total LOTTO Sales (incl. VAT) Highest Weekly LOTTO sales Total Prizes Paid Total Contribution to NLDTF R30 Million 4,1m R R R R

Contributions (average over 7years)

Ticket Sales Per Province (Rm)

Uthingo NLB NLDTF DA Charities DA Art & Culture DA Sport DA RDP DA Misc 22% 36% 22% 5% 15% Weekly transfer Central Applications Office REGULATOR Monitors activities & approves games NGOs CBOs Applications Allocation and distribution of funds (average turnaround time is 3 months) Structure Operates the National Lottery

Charities Focus Capacity Building Poverty Alleviation Community and Residential Programmes for –children –youth –women –the aged –persons with disabilities –people affected by / infected with HIV/AIDS –the terminally ill –drug abusers

Charities Activity Year Ending March No. of Applications received No. of Applications Approved No. of Applications Rejected Pending

Arts, Culture & Heritage Focus Major Projects of National Significance Rural Grants for projects designed to serve the community Creative Development Grants Festivals Film Production and Distribution Public Art Heritage: Architectural, Archaeological, Historical and Indigenous Knowledge Systems. Environment

Arts, Culture & Heritage Activity Year Ending March No. of Applications received No. of Applications Approved No. of Applications Rejected Pending

Sports Focus Capacity building for sports people, managers, administrators and coaches. Equipment and kit for teams and clubs. Upgrading of existing sporting facilities.

Sports Activity Year Ending March No. of Applications received No. of Applications Approved No. of Applications Rejected Pending

NLDTF Disbursements Actual Cash Paid 31 March 2004 (Mil) Total Charities Arts Sport Miscellaneous Total

NLDTF Commitments Grants made but not paid (Mil) Charities483 Arts386.6 Sport261.4 Miscellaneous0 Total1131

Gambling Research

Participation

Reasons for NOT Participating

Acceptability

Buying Frequency (Lotto)

Buying Frequency (Instants)

Allocation of Winnings

Expenditure on Lottery

Expenditure on Instants

Household Budget Behaviour

Impact of Big Jackpots

Extra Spend on Big Jackpots

Expenditure Displacement

Expenditure Sat vs Wed

Influence of Good Causes

More Playing Alternatives

Problem Gambling

Extent of Problem Gambling Used Gamblers Anonymous 20 Questions 1.2% of all Lottery Players exhibit potential 0.8% of the Population NCSG (2001) study shows 1.74% less than 0,5 % of household expenditure is allocated to lottery

Propensity to Gamble Lottery vs Other Modes

49 NUMBERS HAVE EXACTLY THE SAME CHANCE TO BE SELECTED

THE CHANCE OF DRAWING THE COMBINATION :

CHANCES OF GETTING 4 NUMBERS RIGHT IN THE NEXT DRAW IS:

STRENGTHSWEAKNESSES OPPORTUNITIESTHREATS Low Cost High Integrity Highly Skilled Staff Responsible Play Restricted Market Statutory Impediments Public Relations Isolation Low Throughput Throughput/Service New Models of Funding Accessibility Public Relations Collaboration Illegal Lotteries/Competitions Money Laundering/Syndicates Excessive Play

Planned Impact Easier and Faster access to Lottery Funding in all sectors More Equitable and Sustainable Distribution More Responsible Lottery Participation