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Consultants' report favours 'prize bonds' for sports lottery
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NEWS RELEASE

MINISTER FOR HOME AFFAIRS

27 November 1980.

CONSULTANTS' REPORT FAVOURS 'PRIZE BONDS'

FOR SPORTS LOTTERY »

Recommendations contained in a Government-commissioned

feasibility study for a National Sports « Lottery » were

released by the Minister for Home Affairs and Environment,

Mr Bob « Ellicott » , today.

"The Government has been advised that, if it decides to go

ahead with a National Sports « Lottery » , it should seriously

examine a Prize Bonds « lottery » scheme", the Minister said.

"Unlike other lotteries, a Prize Bonds « lottery » would be an

incentive for participants to save rather than gamble, so

would increase national savings".

As described in the feasibility study's report (by the ■

consulting firm of Peat, Marwick Mitchell Services), the

Prize Bonds or Sportsbonds « lottery » does not involve the

loss of stake money.

Participants contribute money to a savings scheme which is

run in the same way as Australian Government Savings Bonds

— the difference being that interest is pooled a n d , from

the pool, prizes are awarded as in a routine « lottery » draw. ·

As estimated by PMM Services, a Sportsbonds « lottery » would

produfib mote than $500 million over ten years if the interest

mdhgy whs tax free. ·

- Mr « Ellicott » said he was pleased that PMM Services had

recommended a fund-raising scheme which was of potentially

substantial benefit to Australian sport and which was based

on saving:

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"The proposal is certainly more compatible with* the dignity

attaching to any federally-initiated « lottery » scheme, and

it would have little adverse effect on State revenues".

Mr « Ellicott » said that he had circulated copies of the PMM

Services report to the Recreation Ministers in the States

and Northern Territory — including the Queensland and

Western Australian Ministers who had opted not to take part

in the study. .

"I have advised the Ministers that, at this stage, the proposals

do not have the Commonwealth Government's approval and that

we are interested in gathering their various reactions.

"I am confident that there will be general and widespread

interest in the consultants' views. They hold implications

for the future growth of sport which, as we know, has such

a bearing on our quality of life and health", Mr « Ellicott »

said.

N BV o : No. 8r of 1980 Canberra

J i . ; . ■ * * * * * * * * . .·*λ

EXTRACT FROM-REPORT ON FEASIBILITY -STUDY OF .NATIONAL SPORTS l o t t e r y ... . . ■ ■ . ■

SUMMARY OF FINDINGS AND RECOMMENDATIONS : ; ' '

If the Government should decide to institute a. National Sports « Lottery » , for which there is widespread support, it is considered that the Prize Bond format is the most suitable. . ·

Sport

Australia is, and always has been, a sports-oriented nation. Its international sports successes have been more numerous than its population would warrant and the comparative decline in the 1970s has disappointed many Australians.

Sport's contribution to the quality of life is recognised by the public and by all political parties; its contribution to national health is seen.as particularly important. Local, State end Commonwealth, Governments spend money on sports

facilities and on sport a n d .recreation programmes. The level of expenditure is felt by sports organisations to be too low, and Commonwealth expenditure is lower than many comparable countries. The Confederation of Australian Sport, representing over 100 sports, claims that no major sport-enjoys international facilities in Australia. The CAS has produced a Master Plan for improvement of Sport, concentrating on facilities, coaching and administration. ·

Gambling '

Australia is a nation wcith a high incidence of gambling and in recent years there have been many legal ways to gamble. Turnover of major legal gambling forms rose from $2,277m in 1970/1 to $6,929m in 1978/9 (204% rise). This represents an event grealter proportional expenditure rise from $305m to $1,001m (228% rise). This is because the games which have

expanded in this period are the ones which retain more of the gamblers" stakemoney.

Although inflation (and, to a lesser degree, population growth) has ensured that all forms of gambling have enjoyed an increasing turnover, the picture is different in the last four years.if the inflationary factor is removed. The years

from 1974/5 to 1978/9 then show only a 6% increase in expenditure (from a 1% decline in turnover). If the increase in total population is also taken from these figures the expenditure increase is only 3% and the turnover falls by 5%. Though turnover in current dollars continues to rise, inflation since 1974/5 has masked a real decline in turnover. For expenditure there has been a real (though small) increase.

Preliminary figures from several States indicate that total . turnover in real terms fell from 1978/9 to 1979/80.

Revenue

State revenues for- gambling have also risen-fasterthan . · ·/ turnover.. They rose by 278% from 1970/1. to 1978/9, again ' because of the lower prize distribution of many new games. Despite this, gambling revenue, as a percent of total revenue

for all States, h a s ;fallen from 9% in the early 1970s to under 8% in the late 1970s due to the proportionately greater rise from other sources of revenue. The fear that the comparative erosion of this area, of revenue might be exacerbated by a National « Lottery » is a great source of concern to the States.

Hypothecation of Revenue

This is the dedication of the revenue from a tax to a specific purpos^. It is widely practised in the States for hospitals and charities, and also for racing. Many overseas countries practipe hypothecation of « lottery » revenues for sport - Canada, West Germany, USSR and the Netherlands are examples.

Attitudes towards a National Sports « Lottery » " I ' ■ ■ ■

A market research study was not a constituent part of this study, though an AGP survey in 1979 showed 65% of Australians approved a National Sports « Lottery » . Out of more than 100 Interviews during this study almost none of those interviewed were opposed to increased expenditure on Sport. The possible t

source of those funds was a more contentiou-s subject. )

Broadly, those in favour of a Sports « Lottery » were:

- Sporting associations, for obvious reasons; . ■

- State Sport and Recreation Departments, who could think of many ways in which Sport might benefit;

- members of the public, for health, nationalistic and other reasons. '

Those against w e r e : .

- State Treasuries, whose revenues v/ould be further eroded;

- State officials, who pointed out that charitable organisations at present benefiting would suffer;

- operators of existing forms of gambling, who feared that the gambling dollar would be divided into .

smaller pieces.

Several individuals commented on the fact that there was little information on the sociological effects of gambling and that the gambling mix in any State was largely unplanned.

An alternative to a « lottery » as a contributor to sport (some · sporting bodies .considered) is the use of that amount of Sales Tax which is levied on sporting equipment. This is estimated by the Treasury to total $30m per year. ,

' Effect of New Gambling Games

In the past six years a number of new games have entered the · Australian gambling market. Large· scale . changes . resulting · ' ' . from, economic conditions, population, changes, tourism and · other reasons have tended to mask the effects of new games.

Many of the new Australian games have built up slowly, which also conceals the effects. Several overseas and Australian examples indicate that.a large proportion of the revenue from the new game comes from existing games. The slowly growing level of real expenditure is not large enough to prove conclusively that total expenditure increases with new

games. It is considered that much.of the revenue from any new gambling will be 1 cannibalised' from existing games.

There· is, however, another factor which must be considered. Betting associated with racing is declining in real terms. There is no doubt that part of this decline must be due to competition from new games. One would not expect, however, that any new game would affect, for example, oh-course bookmakers. Their real decline, along with other racing betting may also be due to a change in the leisure and

recreational interests of the population. It is quite possible that these forms of gambling would have had much the same pattern of turnover even· if there had been no new game. ‘ Therefore the creation of new gambling money by the new games

(in previous non-gamblers for example) may be disguised by a quite independent decline in existing games, ,

Alternative Games '

There are very few basic types of « lottery » : '

- Draw lotteries: passive (State lotteries)

- Multi-number games: participative (Lotto, Pools, Keno)

- i Single number games: passive (Super 66) or participative (US 1 N|Umbers· Game ')

- Instant Money: semi-participative '

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Any new « lottery » may be a variation of one of these types. It is considered that draw lotteries and Lotto are so entrenched in the States that their probable elimination by a national game would be unacceptable. .

The four, alternative games are: .

1 . Overlay game

2. Numbers game

3. Instant game, and

4. Prize bonds

Overlay Game

This /is a second game, played on a. Lotto or Football Pools coupon. Prizes, are granted according to how close a number preprinted on the form comes to. a number drawn each week?.

Estimated revenue to Sport over ten years is $400m.

Numbers Game . ■ ■ ·

As played, legally, in the US this consists of a 3 or 4 digit number forecast by. the player. Daily draws of a number take place. The prizes for forecasting correctly are usually fixed-odds.

Without market research and possibly test marketing to evaluate its acceptance by Australians, it would be impossible to estimate turnover and revenue. The US experience is such that it is quite possible that this would be the largest money-spinner of all games.

Instant Game , ·

The player removes a protective coating from a panel to reveal whether or not a prize has been won. Smaller prizes are collected.immediately from the retailer. Additional features are an extra draw « lottery » on the basis of some form

of qualification (second panel on ticket, for example) and continuity features (saving a series of letters).. An instant « lottery » operates in South Australia,

Ten year revenue to Sport is estimated at $688m, though there is a possibility that it might not last ten years. The sales pattern of these games has been that of decline after initial enthusiasm. We have not seen examples of an instant game which has settled down at a stable level.

Prize Bonds (Sportsbonds)

This type of « lottery » does not involve loss of stakemoney. Money is saved as with Savings Bonds. The interest is pooled and from this fund prizes are awarded as in a draw « lottery » . The scheme proposed in this study is estimated to produce $520m over ten years if the interest is free of

income tax.

Disbursement of Revenue

If the decision is made to channel extra money from a « lottery » into Sport it is recommended that this'take place through a Committee appointed by the Minister of Home Affairs (1 The Sports Trust1).

The Sports Trust - Functions

The Chairman of the Trust would be responsible to the Minister for all aspects of the Sports « Lottery » body, but the executive

work would be carried out by a Director and his staff. The main responsibilities of the Trust would be t o : ,

supervise the « lottery » operation; .

maintain records of Sports facilities and planned ■ Commonwealth,' State and Local expenditures on Sport;

cost alternative schemes to aid Sport;

present to States schemes for new facilities for their consideration and negotiate with State and local government the partnerships for the erection of each facility;

- ; if it is a requirement, monitor that money is spent on

each State in proportion to revenue earned;

- provide the Minister of Home Affairs with regular, audited accounts, with information on what schemes have, been and are to be carried out. · t

The Sports Trust - Composition . '

There would be many interested parties to the disbursement of sport revenue and it is recommended for administrative efficiency that the Sports Trust Committee set up to run a National Sports « Lottery » consist of the following members:

- an independent chairman, appointed by the Minister of Home Affairs; .

- a full time director, again appointed by the Minister;

- a representative of the States, to be nominated by the Standing Committee on Recreation; .

- three sports representatives, appointed by the Minister. Ideally they should be seen to speak for more than one sport, such as officials of the Confederation of Australian Sport or the Australian Olympic Federation.

Governments and Sporting Bodies

The role of a sports « lottery » is seen as supplementing existing assistance to sport, not as replacing.it. The need for better facilities, administration and coaching has been demonstrated. It is assumed that all levels of Government - Commonwealth,'

State and Local - will continue to finance sport as they do at present and that the extra income will be devoted to projects which cannot at present be undertaken. Sporting bodies, it is assumed, will continue their 'self-help1 money­

raising schemes. · .

advise on coaching and administrative schemes to be subsidised;· '

advise on championships, teams and individuals to be subsidised; ' .

Recommended « Lottery »

If the Commonwealth Government decides to institute a National Sports « Lottery » it is recommended that it seriously examine the Prize Bonds scheme. Its main advantages, few enjoyed by any of the other schemes, are: ·

- it would have little adverse effect of State revenues: all other schemes would have major impacts;

- it is an incentive to save, rather than to gamble, and

so would increase national savings;

- it is more compatible with the dignity of a National

Government to promote savings than to promote gambling (a very widespread reaction during interviews);

- it is less regressive in its taxation effects than most forms of gambling; ,

- it would be much less subject to fluctuation than a ·

« lottery » , thus providing a regular income to Sport; '

- participants do not lose their stakemoney;

- revenue could be spent on a national basis, to the best

advantage of Sport;

- it could be sold through Post Offices throughout the country; '

- to identify with Sport the Bonds could be called Sportsbonds.

Major disadvantages would be:

- it would compete directly with Australian Savings Bonds;

- it would compete to some extent with other forms of

savings; for example, semi-government bonds;

- it would compete to a small extent with State lotteries.

A Sportsbond scheme could be run in the same way as Australian Savings Bonds are administered, or Australia Post could be made responsible for the day-to-day running. The Treasury and the Reserve Bank would have an interest in the-scheme,

as they have in ASBs. The States, througn their membership of the Loan Council, may have an ultimate say in the scheme. The exact legal position awaits the considered opinion of the Attorney Gdheral's Department.

ihe overwhelming disadvantage of the other schemes is that they would have a very large effect on States revenues from ' §ther gaiiiblihg gdmes. . ■

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