Gambling for sports

03.12.2012 | By Ihor Levenstein

In many countries sports lotteries are a key source of financial support
of the sports industry

The state program for the development of physical education and sports in Ukraine in 2012-2016 currently being approved by the government calls for alternative extra-budgetary sources of financing the development of sports, in particular the national lottery, First Deputy Head of the State Youth and Sports Service Serhiy Hlushchenko

Playing with Lady Luck

Sporting events are often totally unpredictable. Their massive scale and hype attract the attention of many sports fans and people with a gambling habit as a form of entertainment and a chance to win prizes or big money. Peoples desires for such games are so strong that they make sports lotteries a highly profitable business.

The main forms of sports lotteries are instant lotteries, number lotteries and predictions. Instant win lotteries are offered at stadiums and arenas where the sector number, row and seat on tickets are determined by the luck of the draw.

Number lotteries catch the attention of considerably more players and are based on guessing a certain set of numbers in any form of sports.

In the post-Soviet era the most popular numbers lotteries were Sportlotto and Keno. Over the most recent years the Internet and electronic payment systems are used in numbers lotteries. In sports prediction lotteries the players try to guess the results of games or matches according to a specific list of parameters.

Every country has its own set of rules for conducting lotteries, the lottery tickets have different forms and the percentages of deductions for payouts to winners vary. In some countries the amount of the jackpot is unlimited and depends only on the total value of sold lottery tickets and the total number of wins.

There are lotteries in which one or even two additional preferential balls are drawn, there is a difference in the procedure for holding draws and there are different drawing machines for mixing and drawing of winning balls.

What is interesting is that the prototype for sports numbers lotteries is the 5 out of 90 formula organized in 1530 in the Italian city of Genoa, where the elections to the main body of self-government of the Republic of Genoa the Grand Council was held based on draws.

World practice

Speaking about the need to organize a Ukrainian national sports lottery Hlushchenko recalled the experience of the UK. In their time school yards and college football stadiums were sold or allotted for parking lots thanks to the reforms of former Prime Minister Margaret Thatcher.

As a result, in 1996 at the Olympic Games in Atlanta the UK fell to 36th place. This dealt such a blow to the self-esteem of the UK that a decision was made to form a central body of power called UK Sport that is responsible for the development of sports in the country.

In 1997 a lottery was introduced with a ticket for one British pound. Every week the lottery collects GBP 5-6 mn. Brits gladly buy up tickets as 50% of sales proceeds go to the winners fund and the rest go for the development of sports, Hlushchenko noted.

The success of Chinese athletes in recent years is undisputable and impressive. The roots of such success are in sports lotteries. In 1989 a sports lottery was officially drawn for the first time on the national scale in order to raise funds for holding the 11th Asian Games. After that, sports lotteries were recognized as being socially important and a money maker.

In 1994 the Sports Lottery Control Center was created under the auspices of Chinas Central Administration of Physical Education and Sports. Similar centers operate today in all provinces and cities in China that are subordinated to the center. They form the pan-Chinese network of issuing, distribution and sale of lottery ticketsaccording to a unified procedure and is under strict control. Gradually, the was linked to international sporting events and the list of wins is multi-faceted. Revenues from it were a substantial part of financing the preparation for the 2008 Olympics in Beijing. The Chinese againg did not reinvent the wheel but simply used Soviet experience, when the revenues from SportLotto accounted for around 70% of the budget funds to finance the games, which are estimated at 1.7 billion Soviet rubles.

Ukraines endeavors

In Ukraine talks about organizing a sports lottery and the channeling of revenues from it towards the development of sports in the country have been ongoing for the past 15 years. Despite this, so far this venture is at a standstill. Experts in this sphere say the main problem is a conflict of interest between the state and private businessmen trying to enter the lottery market.

The lawmaking process that began in 1998 with the submission of the bill On State Lotteries ended with the adoption of the Law of Ukraine On State Lotteries in Ukraine on July 5, 2012.

The state lotteries market is one of the most closed ones among business clubs in Ukraine. In any case, since 2005 entry to this market could not even be theoretically granted due to the effect of the Law of Ukraine On Imposing a Moratorium on the Issuing of Licenses for Launch and Operation of a Lottery.

By virtue of this law a ban was introduced on the issuing of licenses for launching and operating a lottery until the passing of the law on the state regulation of the lottery business.

After the ban on the gambling business in June 2009 (specifically, after the fire in a gambling hall in Dnipropetrovsk), state lotteries are the only form of gambling in Ukraine that is permitted by law. The state lottery market in Ukraine is represented by three main operators MSL (all types of lotteries), the Ukrainian National Lottery (numbers lotteries) and Patriot (instant lotteries).

Over the past 50 years the notion of a state monopoly has become enriched by the new practice of its sale presupposing the conveyance of rights to hold lotteries on behalf of the state to non-state (i.e. private) operators that are obligated to pay a certain percentage of the earnings from their activity to the national budget.

This is precisely how a state monopoly was organized in Italy, the UK, Greece, Poland and other countries. The conveyance of rights to a private operator for holding lotteries allows for significantly reducing budget expenditures on organizing a lottery, lowering its risks and mitigating corruption in the process of organizing lotteries.

If the interests of the state and private players in holding Eurobasket 2015 and Ukraines bid to host the 2022 Winter Olympics coincide one can expect that a national sports lottery will emerge on the Ukrainian market in the coming year.

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