Eesti Loto, the state Estonian lottery association, is facing financial problems because of too many lottery organizers and unfair competition in the market, its leaders say.
“The Estonian legislation, which dates back to the year 1994, is too liberal. The number of lottery organizers has to be limited and licensing requirements have to be stricter. Every lottery organizer should pay taxes as Eesti Loto does,” said Sven Kolga, its head.
The state lottery owes the government 1.6-million kroons ($109,215). Eesti Loto is the only lottery organizer in Estonia that pays gambling tax. Several competitors do not have to pay taxes, because the law does not require it from lotteries dealing with endowment of certain projects or marketing a special product.
The European State Lottery and Toto Association has been trying to help to improve Estonia’s lottery legislation, Kolga said. Members of the ESLTA visited Estonia at the end of September and suggested that Estonia monopolize the lottery business and bring its legislation into line with the European Union. EU experts said the many lottery organizers and different terms for payment of gambling tax as the main problems in Estonia.
“In 98 percent of European countries, the lottery business is organized by the government or is under strict governmental control,” said Kolga. “There is no domestic competition in lottery business in the EU. Monopolization guarantees a better control and limits expenses. Competition, on the other hand, brings along additional expenses and is disfavored by these countries.”
There are at present 27 valid lottery permits issued by the Estonian Ministry of Finance. Kolga said that a few counterfeit lottery tickets have also been found on the market, although police have not found any evidence for prosecution.
Eesti Loto is the only lottery organizer paying a gambling tax, 16 percent on sales of scratch lottery and 11 percent for online lottery sales, to the state budget. Half these funds go to the Estonian Olympic Committee and the remainder for supporting cultural, sports, scientific, social and environmental projects.
Currently three-fourths of the turnover of lottery games comes from online lottery. In 1998 the company paid out 50 percent of its 120 million kroon turnover in prizes and 15 million kroons to the state budget. In 1997 Eesti Loto took in 15 million kroons more in sales than in 1998.
“We have not reached the level of sales in online lottery business, which enables to cover the technical costs of online lottery system,” said Kolga. ” Sales have been declining over the last few years due to the slowdown of the economy and the declining interest in gambling. The tradition of gambling is short in Estonia,” said Kolga.
In January, Eesti Loto will join the Scandinavian Viking Lotto, which, according to Kolga, might liven up the lottery system in Estonia. Viking Lottery was established in 1993 and its biggest jackpot ever was 60 million kroons. Kolga said that the huge jackpot makes the game very attractive to local gamblers.
“Our access to their system shows that our business is trustworthy and secure,” Kolga said.
Unlike most European lottery associations, Eesti Loto does not offer consulting services to happy clients but has delegated this task to Hansapank and Uhispank, which help winners of over 100,000 kroons to invest their money.
“Some people have contacted them after receiving their prizes, but most are not interested in sharing the information with anyone else,” said Kolga, who aded that Estonians prefer cash prizes to merchandise like cars.
According to the company’s business plan, the sales of lottery tickets should grow by 40 percent by the year 2000 mostly because of the new cooperation with the Scandinavian lottery system.
“There is a lot to grow. Compared to the Finns, Estonians spend 30 times less money on lottery games,” said Kolga. Statistics show that last year Estonians spent an average of $ 6.3, Lithuanians, $6.9, and Latvians, $1.5, on lottery tickets. In Lithuania the market is not regulated, but in Latvia the lottery organizer has a monopoly.
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