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The National Lottery and the non-profit sector

1.4 The National Lottery Distribution Trust Fund (NLDTF)
 
The money raised through the sales of Lotto tickets and scratch card, after VAT, is distributed according to the following formula:8
  • 50%—goes to prizes
  • 20 %—goes to the licensee (Uthingo)
  • 30%—distributed to good causes (National Lottery Distribution Trust Fund)
The 20% awarded to the licensee is divided further into two categories, namely:
  • 15%—which goes to the licensee (Uthingo)
  • 5%—which goes to the various distribution outlets and vendors
Whilst many commentators have been quick to criticise Uthingo for making huge profits out of the Lottery,9 this formula was agreed upon by parliament, and is part of the contract entered into with the operator. Moreover, in-so-far as the Operator makes its profits by maximising overall ticket sales, they are also increasing the share transferred to good causes. There is little to be gained in criticising the Operator for making a profit!

30% of ticket sales, after VAT, are thus intended for good causes. This money constitutes the National Lottery Distribution Trust Fund, which is established and monitored—but, as we suggest below, need not necessarily be administered directly—by the National Lotteries Board. The money is transferred to the NLDTF on a weekly basis,10 whilst the distribution of these funds takes place on an annual basis.

No more than 10% of the money awarded to the National Lottery Distribution Trust Fund for distribution to good causes—i.e. no more than 3% of the total proceeds from ticket sales—is allowed to be used for administration. The Lottery Board is proud of its ability to administer the Fund within such tight financial parameters, and claims that their overhead costs are considerably lower than those levied by earlier lottery-funded grant-making organisations.

One question that might be considered when considering the terms and conditions for the second licensee (i.e. after 2007) is whether the amount stipulated for good causes should remain at 30%, and whether this amount should include the expenses of the Lotteries Board.

Footnotes:
  1. I have not been able to get access to the contract entered into by Uthingo. The information in this section is drawn largely from my interview with Brian Bailey 12/06/2002.
  2. Nigel Bruce, for example, has claimed that Uthingo is “growing obscenely rich on the proceeds alone of the cash flows it handles” (correspondence from the DA). As with most of Bruce’s claims about the National Lottery, this is part phantasy, part simply ignorance.
  3. This appears to be the case, although I have not been able to obtain a copy of the contract to verify it.
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