1. National Lotteries Board Portfolio Committee Briefing October 2004

2. Agenda Background Organisational Structure Financials Activities

3. 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

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

5. 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

6. 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

7. 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

8. Organisational Structure

10. National Lotteries Board’s Equity and Gender

11. Financial Statements

12. 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 2004 717 984 18 900 736 884 519 397 125 706 467 202 942 126 428 806 127 165 690 - 227 848 126 425 276 512 566 - 126 937 842 127 165 690 2003 1 172 653 162 737 1 335 390 27 833 865 87 118 136 6 239 599 121 191 600 122 526 990 4 600 495 455 697 115 728 105 222 252 1 520 441 117 470 798 122 526 990

13. Revenue Operating costs Operating deficit before finance costs Finance costs Operating deficit Investment income Deficit for the year 8 920 505 (13 756 980) (4 836 475) (766) (4 837 241) 236 746 (4 600 495) 11 055 404 (11 869 166) (813 762) (3 101) (816 863) 816 863 - 20042003 NLB Income Statement for the year ended 31 March 2004

14. 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 2004 14 385 997 1 807 390 581 1 057 630 675 2 879 407 253 1 693 676 398 1 185 730 855 2 879 407 253 2003 37 053 974 1 461 370 978 708 404 915 2 206 829 867 1 653 310 881 553 518 986 2 206 829 867 NLDTF Balance Sheet as at 31 March 2004

15. Revenue Finance income Other income Disbursement of funds Assistance to the National Lotteries Board Other operating expenses Net surplus for the year 986 642 353 301 937 520 4 690 000 1 293 269 873 (1 244 844 629) (8 045 328) (14 399) (1 252 904 356) 40 365 517 1 009 421 136 219 133 320 20 958 739 1 249 513 195 (734 452 855) (11 400 000) (13 717) (745 866 572 503 646 623 NLDTF Income Statement for the year ended 31 March 2004 20042003

16. Budget 2004/20052005/20062006/2007 Income26527050 Grant 24,544 25,924 28,037 Expenditure 20,738

17. Cost/Disbursement Ratio NLBUKNDA

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

19. 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

20. 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

21. 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 43 033 473 89 24 R30 Million 4,1m R4 094 300 637 R101 031 555 R2 026 713 820 R986 642 353

22. Contributions (average over 7years)

23. Ticket Sales Per Province (Rm)

24. 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

25. 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

26. Charities Activity Year Ending March No. of Applications received No. of Applications Approved No. of Applications Rejected Pending 20022255 8491406- 2003406313572670 36 20043925 856 2302767

27. 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

28. Arts, Culture & Heritage Activity Year Ending March No. of Applications received No. of Applications Approved No. of Applications Rejected Pending 2002 746149 597- 200313982831097 18 20041838680 481012

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

30. Sports Activity Year Ending March No. of Applications received No. of Applications Approved No. of Applications Rejected Pending 2002 535247288- 20031016408606 2 200414572091941054

31. NLDTF Disbursements Actual Cash Paid 31 March 2004 (Mil) 2001200220032004Total Charities069.5174.5302.7546.7 Arts025.440.1135.2200.8 Sport021.662.5149.2233.5 Miscellaneous4.109.617.431.1 Total4.1116.5286.8604.61012.2

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

33. Gambling Research

34. Participation

35. Reasons for NOT Participating

36. Acceptability

37. Buying Frequency (Lotto)

38. Buying Frequency (Instants)

39. Allocation of Winnings

40. Expenditure on Lottery

41. Expenditure on Instants

42. Household Budget Behaviour

43. Impact of Big Jackpots

44. Extra Spend on Big Jackpots

45. Expenditure Displacement

46. Expenditure Sat vs Wed

47. Influence of Good Causes

48. More Playing Alternatives

49. Problem Gambling

50. 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

51. Propensity to Gamble Lottery vs Other Modes

52. 49 NUMBERS HAVE EXACTLY THE SAME CHANCE TO BE SELECTED

53. THE CHANCE OF DRAWING THE COMBINATION 1 2 3 4 5 6:

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

55. 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

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