The coming of the Lottery: Will Batswana benefit?

Roll the dice: Gambling is a multi-billion dollar industry worldwide PIC: FOXBUSINESS
Roll the dice: Gambling is a multi-billion dollar industry worldwide PIC: FOXBUSINESS

In the past few weeks, a group of personalities have been decrying the delay of the institution of the National Lotto/Lottery on social media, using the hashtag #LottoKeYaRona and #LottoEKae.

They largely focused on the supposed benefits the lotto/lottery would bring to the economy and why it is important to expedite the awarding and operation of the lotto/lottery. These 'protests' piqued my interest, not in the behind-the-scenes issues related to awarding of the lottery, but more in the Business of the Lottery and to investigate what Botswana should really expect when the operation is up and running. My interest in the issue is purely on commercial opportunities, citizen empowerment and socio-economic effects basis. In Botswana, the plan to start a national lottery was announced in 2017 by the Gambling Authority via a tender. After a long selection process, a preferred bidder was announced in June 2020.

This consortium of companies was expected to execute the lottery within 12 months. Unfortunately for whatever reasons, the preferred bidder was not able to satisfy the conditions precedent satisfactorily to the Gambling Authority and this forced the authority to cancel the award and begin negotiations with the reserve bidder.

This has led to the usual interdict versus counter interdict versus appeal situation, which the bidders have every right to. My concern, and the concern of other personalities, is: what does this mean to us as a country? Especially with an unemployment rate of around 25% (though if you remove government internship and initiative, Tirelo Setshaba and Ipelegeng respectively this number is probably closer to 40%)? The modern lottery, with its jackpots, is descended from the age-old practice of the drawing of lots. Evidence of similar odds-based activities can be traced as far back to Egyptian gaming artefacts dated around 3500 BC, and casting lots is even referenced (quite often) in the Bible. Written records of lotteries began to crop up during the 15th Century, as merchants both utilised the game for their purposes and spread the concept from city to city. In the 1440s, merchants began organising lotteries to fund government projects. The money from these lotteries often went to fortifications or other municipal projects, including programmes assisting impoverished citizens. This theme has stayed true to lotteries throughout history even into modern times. First and foremost, the lottery is a capitalist business venture like any other, where the primary target is to earn the shareholders a return.

This will also be the case in Botswana. The company itself will be expected to have employees and also will have a suite of services that will be provided by other companies in the value chain. The most direct beneficiaries tend to be to retail stores where, in most instances of a lottery, the lottery cards are distributed. This will earn shop owners (hopefully across the country and in smaller retail chains and establishments) a commission for selling the cards. Other services in the value chain will include such services as distribution of the cards, security, financial solutions, IT, counselling, legal etc. It should also be noted that as technology influences all other sectors, it will also influence how the lottery will get played.

This should lead to opportunities for innovation in creating lottery games (games are a huge industry across the world), technology support, cybersecurity, application development, data management and also fintech services. With the proliferation of mobile wallets, one can envision a world where these get linked up with the lottery leading to opportunities and jobs in the technology space (in fact, Gambling Authority has already signed an agreement with Botswana Innovation Hub to create an incubator for such opportunities).

Upon closer inspection of the lottery business model, you also realise that the ticket sales benefit more than just the lottery business owner and the value chain suppliers. As at the end of March 2021, the UK National Lottery had ticket sales of over GBP 8 billion (BWP120 billion). Close to 20% of these sales were transferred to the National Lottery’s causes.

Just like in olden times, they use the lottery to fund national interests. The National Lottery Charity donates 40% allocated to it to educational, environmental and charitable causes. The other 60% is split between sports, arts and cultural funding. The national lottery supports grassroots development of these sectors and also sponsors Olympians for Team GB preparation. Closer to home in South Africa, over the past decade, the lottery there has contributed over R1.5 billion every year into the National Lottery Distribution Trust Fund. Of these amounts, roughly 50% has been donated to charitable causes, sports and recreation around 30% and arts and culture around 20%. So whilst the lottery has very clear benefits to the economy in direct employment creation in its own value chain, its inception would assist in growing other industries in the economy which would complement the efforts of the government in that regard.

A similar setup as in the above-mentioned countries would be able to grow industries and sectors which would most likely absorb the youth and reduce unemployment. In particular, opportunities in the technology space, as well as its funding of sports, arts and culture, would hopefully improve livelihoods and reduce the burden on the government in developing these sectors and making them profitable, which would further have trickle-down effects on other service industries like banking, marketing, legal etc. So in conclusion, while it is easy to see the delay in the execution of the lottery as a situation that affects only the companies involved, it really affects the greater economy and the possible opportunities especially for the youth population in Botswana that is already crippled by unemployment. Without prejudicing any processes that need to occur, it is probably in the best interests of the government to speed up the finalisation of the impasse.

And all of this without even mentioning the change in the lives of the lottery winners.

*Mphoeng is a director at Spectrum Analytics, a local citizen-owned data analytics company that offers services in Digital Transformation Consultancy, application development and process automation and improvement. Previously he worked for the University of Botswana as a Lecturer in Accounting and Finance, Botswana Investment Fund Management (BIFM), Standard Chartered Bank and Bank of Botswana.

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