A contractual error is the main reason there has been a shortfall in the sports lotteries revenue, but the lotteries still have the potential to earn more money, an analyst said yesterday.
Taiwan Sports Lottery Corp, run by Taipei Fubon Bank, asked the government on Feb. 8 to allow it to halve the contracted amount of revenue it must give the treasury because sales were lower than forecasted. It attributed the slow sales to a delay in launching the lotteries, a change made to regulations governing its issuance and the global financial crisis.
“Given the current regulations, the sports lotteries are doomed to be non-profitable for operators,” said Griffey Chang, a sports lotteries analyst who breaks down game odds daily for betters. “It’s not that there’s no market for sports betting in Taiwan. On the contrary, there has been a huge underground betting market for years.”
One crucial factor was the government’s request that the Taiwan Sports Lottery submit the annual revenue by a fixed-rate portion of “expected sales” rather than “actual sales.”
The contract specifies that Taipei Fubon Bank must pay NT$20.83 billion (US$652 million) over six years, an average of NT$3.47 billion a year.
The bank had forecast sales would reach NT$33.65 billion from 2008 to last year, but the actual sales were NT$19.1 billion — 56.8 percent of expected sales.
The large amount of forecast revenue had forced the bank to add it as an operating cost and bookmakers to lower the game odds, making the lotteries unappealing for consumers, who ended up betting with underground operators, Chang said.
The other problem affecting sales was that betters cannot bet on single games because of fears this could lead to game-fixing. This means local professional baseball games are bundled with US Major League (MLB) games, which means betters have to correctly predict the outcomes of several local and MLB games to win.
“The design discourages betters who don’t follow foreign sports or do not read English,” Chang said.
The creation of the sports lotteries, however, has turned more people into sports fans, he said. Over time, the lotteries will have a positive impact on local sports by bringing in more fans as well as providing the sports federation with revenue, he said.
Taiwan Sports Lottery has a six-year contract to run the lotteries, from 2008 to 2013.
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