Mr. Dermot Griffin:

I thank the Chairman and members for the opportunity to address the committee. I am Dermot Griffin, CEO of Premier Lotteries Ireland, PLI, the new lottery operator. Prior to this role, I served as chief executive of An Post National Lottery Company for eight years from 2006 to 2014. I welcome today’s opportunity to brief the committee on the new operations of the lottery. I would also like to outline the approach we adopted to achieve a successful transition from the previous licence. I wish to update on our business performance to date where we have over 99% systems availability on the retail network and the central gaming systems. We have exceeded our sales expectations to date which means increased funds for good causes.

I also want to address the recent technology and telecommunications issues which I feel were misconstrued. I would like to take the opportunity to outline the real impact they had and corrective actions we have in progress. To be clear, this was the largest roll-out in the 28-year history of the national lottery and the largest ever in Irish retail.

Premier Lotteries Ireland is an Irish incorporated company with a separate board made up of five directors from our shareholders, An Post and Ontario Teachers' Pension Plan, OTPP. Following a competitive tender process, Premier Lotteries Ireland was awarded the licence to operate the national lottery in February 2014. PLI commenced operation on 30 November 2014 and has operated the lottery since that date with in excess of 72 million transactions taking place on our new systems. Since then, all 417 draws have been completed successfully.

We believe that PLI represents the best in lottery expertise globally and is uniquely positioned to grow the lottery in a responsible manner over the coming 20 years for the benefit of future generations in Ireland. As with any lottery of a similar size and scale, there are a number of technological, operational and logistical complexities to its successful running. To support PLI with the running of the lottery, we have five suppliers in place. Intralotis the lottery system technology partner of PLI. Intralot provides the set-up, maintenance and support of new lottery software platforms and shop terminals. Intralot is one of the top three lottery technology providers worldwide and we believe the right supplier for the Irish market. Intralot is the first international vendor in the gaming sector that has been certified according to the World Lottery Association security control standard and the highest standards of the industry. Intralot technology is used in 57 jurisdictions worldwide.

Camelot Global worked with the national lottery and Intralot to deliver the technical and business transition programme. Camelot Global draws on its experience from the UK, where it supports Europe’s largest interactive lottery. Westbase Technology is a managed telecoms provider contracting 3G services from Telefónica-O2 Ireland, now Three, and broadband from Eircom for our retail communications network. Pollard Banknote provides security printing services to PLI and has been the scratch card supplier to the national lottery for more than 20 years. KPMG continues to provide independent observer services to the national lottery. Moreover, I am supported by the existing national lottery team of more than 90 lottery professionals who have a combined experience of 1,200 years working for the lottery, many of them from the start of the business. To date, I am pleased and proud to say the national lottery has raised in excess of €4.5 billion for good causes, delivered more than €7.5 billion in prizes and created more than 450 millionaires in the process.

As the former CEO of An Post National Lottery Company and CEO of PLI, I look forward to working with this group to continue to grow and build on our legacy. PLI is regulated by the new national lottery regulator, Liam Sloyan. We will work with Mr. Sloyan and his office to ensure the national lottery continues to operate to the highest standards in all respects.

In terms of our licence obligations, there were some key requirements which included a substantial upfront payment of €405 million from the new operator to fund the new children’s hospital and many other community projects. Another key requirement was an ongoing annual contribution to good causes set at 65% of gross gaming revenues, which is sales minus prizes, incentivising PLI to grow the lottery and maximise returns to good causes over the 20-year licence term. There was also a requirement to replace all core systems, ensuring that the new operator utilises the latest technology.

We heard earlier from retailer groups. Retailers are and will remain the key point of sale for the lottery and a key objective for PLI is to grow this retail channel. It is important, however, to address some inaccurate information and to provide some context as to the scale of what has been achieved to date in retail. On cut-over, on 30 November 2014, PLI successfully connected almost 20,000 pieces of equipment in 3,700 retail outlets throughout the country. All central and telecommunications systems were replaced and PLI also introduced a new website and online gaming platform. In excess of 72 million plays have taken place on the new Intralot systems. Some 98% of all transactions are completed within three seconds. The network has been live 99.1% of the time and the central systems 99.97% of the time. This was the largest technology roll-out in the history of the national lottery and the largest ever in Irish retail.

To deliver this, we co-ordinated 44 retailer briefing seminars throughout the country last September and October. We achieved more than 90% participation, with some 3,000 retailers attending the sessions. These sessions outlined the unique logistical challenges of this project and what to expect. We sent our sales representatives to visit anyone who did not attend the training seminars to give them training in their stores. At these seminars, retail agents were informed, among other issues, of the temporary non-availability of the ticket checking service for tickets sold from the new Intralot terminals. As a matter of best practice, we have provided detailed briefs on how to operate the new technology and issued a regular newsletter, Transition Times, updating all retailers on the next steps for transition and what they need to do. PLI also met and continues to meet its agent council, on which representatives from the two retail groups represented here today – CSNA and RGDATA – sit, as well as wider retail representatives. Throughout transition, a dedicated project team of 50 developers and testers has been working to ensure that any technical issues are addressed as swiftly as possible. In advance of the roll-out and during transition to date, we have undertaken rigorous system testing to ensure that all equipment is fully compliant with World Lottery Association standards.

User acceptance testing involved the execution of approximately 2,800 test cases and included performance testing of the terminal to the central system. With regard to the supplier testing on the new terminals and related systems, data migration and interfaces, this involved the execution of more than 1,800 test cases. As I am sure the committee will understand, this has all been an enormous undertaking. There have been a number of temporary outages across parts of the retail network, but we remain committed to completing our transition and, from there, to growing our national lottery into the future.

I wish to address the events of 4 February, when we experienced major disruption due to a core failure on the Telefónica Spanish network which took down the 3G telecommunications data infrastructure and affected more than 3,500 national lottery agents for several hours. Under these circumstances and wishing that all our customers could have the opportunity to play, we made the decision to defer the draw. The regulator was made aware of our decision. The decision ensured that everyone won. The players were able to purchase their tickets for the draw, retailers were able to sell their tickets and, more important, the returns to good causes were not impacted. This was the right and only decision that could have been made. In excess of 400,000 people bought lotto tickets on Thursday, 5 February and the draw went ahead successfully that evening with one lucky winner of the €10 million jackpot.

We have received a report from Westbase Technology which outlines the problem that occurred, how the problem affected our lottery retail estate and how we can prevent this from happening again in the future. This report and reports from other outages were sent to the regulator and we are confident we can take positive learning from the experience, put appropriate contingencies in place and prevent a reoccurrence. Premier Lotteries Ireland has operated the national lottery for just over three months, having successfully completed 72 million transactions with over 99% system availability. All 417 draws were completed, sales are exceeding expectations and we are ahead of plan to grow funds for good causes which benefit the whole of society.