Brendan Howlin (Wexford, Labour) | Oireachtas source

I move: "That the Bill be now read a Second Time."

The National Lottery Bill is intended to replace the National Lottery Act 1986. The Bill has a number of purposes, in particular, the following: to continue to provide a legislative framework for the operation of a national lottery in Ireland; to continue to safeguard the integrity of the national lottery, for example, through the continued safeguarding of cash generated by lottery sales; to provide for a new national lottery regulator who shall be funded by the national lottery operator and independent of the Minister for Public Expenditure and Reform; and to set out certain principles regarding the regulation of the national lottery, for example, the circumstances in which a licence may be amended or revoked.

The national lottery, an crannchur náisiúnta, has been one of Ireland's success stories of the past quarter of a century. The framework for the lottery is set out in the National Lottery Act which was passed by the Houses in 1986. As those of us who were around at the time remember, the national lottery commenced operations in 1987 and has since been operated under a number of licences by An Post National Lottery Company. In accordance with the legislation, 80% of the shares of the national lottery company are held by An Post and the remaining 20% are held by me, as Minister for Public Expenditure and Reform. The present licence held by An Post National Lottery Company is due to expire later this year.

During the past quarter of a century the Irish national lottery has come to be regarded as very innovative and successful. Since 1987, it has raised close to €4 billion for good causes. Throughout this time the national lottery has maintained the support of the general public, which is crucial to the success of any state lottery. It is fair to say concerns have never been raised about the integrity, probity or ethos of our lottery. This achievement is something of which to be proud and should never be taken for granted.

Like so many other businesses in Ireland, the national lottery has been affected by the economic climate of recent years. Both overall lottery sales and the level of funding raised for good causes have declined since 2008. However, this decline has been from an exceptionally strong performance in 2008. Sales in 2011 were only 2% lower than in 2007. The lottery continues to generate a very significant surplus that is used to fund a range of good causes across the State. For example, in 2011 a surplus of just under €232 million was generated by the lottery. Indications are that both national lottery sales and funding for good causes achieved in 2012 will be somewhat less than in 2011.

The decision to establish a national lottery was taken at a time of economic difficulty for Ireland in the 1980s. We are again seeking to address very serious financial and economic challenges. In view of these challenges, the Government decided in November 2011 to explore the opportunities presented by the expiry of the current lottery licence. Following the examination of the various options by my Department, the Government agreed in April 2012 that the following arrangements will apply to the next national lottery licence: there will be a competitive process for the award of the licence which will be for a period of 20 years; the terms of the next licence will include an up-front payment to the State - the intention is that part of this up-front payment will be used to help fund the building of the proposed new national children's hospital; and the next licence will involve the ongoing provision of a significant level of funding for good causes each year, as is the practice.

I do not have discretion regarding whether to hold a competition for the next national lottery licence - I stress this point because some are of the view I can simply award the licence. There must be competitive tendering and, under EU law, the State is obliged to hold a competition for the next licence. However, the State may set the terms of both the competition and the licence, for example, the duration of the licence and the financial arrangements that underpin it. Deputies may recall that a competition for the current licence was held between 1999 and 2001 and attracted interest from three interested parties. Following the withdrawal of the other two parties during the course of the competition, the licence was finally awarded to the incumbent, An Post National Lottery Company.

I do not need to remind Deputies of the difficult economic circumstances in the country. Given the current budgetary position, the Government needs to be innovative and creative where opportunities arise to generate additional resources for the State. Failure to think creatively about how we might find additional resources has a cost and that cost will be reflected in an inability to provide vital elements of social infrastructure for the people. Therefore, the Government has decided to take advantage of the opportunity presented by the expiry of the current licence to provide for new arrangements for the next lottery.

Recent years have seen a number of states and regions across the globe make new arrangements for their lotteries. For example, two Australian states, Queensland and New South Wales, have in recent years successfully put arrangements in place that involved up-front payments to these states, as we now propose. A number of jurisdictions are examining how best their state or regional lotteries can be used to help alleviate fiscal pressures. It would be remiss of Ireland not to take a similar approach in the case of our lottery at this time.

The Government's announcement has created considerable interest and my Department has met a number of potential bidders. At the same time, I am conscious of the complexity of the project and the number of interests and stakeholders involved. I am committed to achieving an outcome that will take into consideration the concerns of all the stakeholders concerned.

The National Lottery Act 1986 enshrined a model which involved the lottery being operated by a State company, of which the Minister was a shareholder. This model has served us well. However, given the need to generate resources for the State in the context of the current budgetary situation, the new Bill envisages an updated model. The holder of the current national lottery licence, An Post, may, of course, bid for the next licence, either on its own or as part of a consortium. The next licence will also attract bids from private sector firms or from consortia of firms. The Bill provides that the Minister will no longer hold shares in the company that operates the national lottery and that he will no longer appoint its directors. However, it does provide for robust regulation of the national lottery by an independent regulator within a statutory regulatory framework - this is the modern way of doing things and what is being followed in other jurisdictions. The regulator shall be responsible, for example, for approving national lottery games, approving the operator's memorandum and articles of association and managing and controlling the national lottery fund. We will set the criteria in these matters.

The competition for the next licence will be undertaken by my Department. Some time ago I approved and published on my Department's website a protocol which sets out the procedures to be followed in contact with potential bidders. It is envisaged that the competition for the next licence will commence during the second quarter of this year. The necessary preparatory work is being carried out by my Department as a priority. My Department is being assisted in the financial and commercial aspects of the process by Davy Corporate Finance. The most important element of the preparatory work for the competition is the introduction of this new legislation to update and replace the National Lottery Act 1986. The National Lottery Bill was published in December 2012 and much of its content simply mirrors the 1986 Act. For example, the Bill does not provide for changes to the categories of good causes which receive funding raised by the national lottery. However, it also contains important new provisions, for example, in the area of regulation.

As well as dealing with the national lottery, the Bill also provides for a number of amendments to the Gaming and Lotteries Act 1956. Section 3 of the Bill provides for the repeal of the 1986 Act. Notwithstanding this, however, section 6(2) provides that the terms of the 1986 Act will continue to apply to the current licence until that licence expires.

I would now like to outline the provisions of the Bill in the light of what I have said about the Government's approach to the future of the national lottery.

Part 1 of the Bill sets out a number of provisions that are preliminary and general in nature. Section 1 is a standard provision and relates to collective citation and commencement of the new legislation by ministerial order. It also deals with the repeal of the 1986 Act by ministerial order. Section 2 sets out definitions of terms contained in the Bill. Section 3 provides for the repeal of the 1986 Act. Section 4 deals with orders made by the Minister under the Act. Section 5 is a standard provision which deals with the expenses of the Minister in the execution of the Act.

Part 2 of the Bill contains just one section, section 6. Subsection 6(1) provides that there shall be a national lottery held on behalf of the Minister in accordance with the provisions of the Act; subsection 6(2) states that notwithstanding the repeal of the 1986 Act, the terms of that Act will continue to apply to the current licence held by An Post National Lottery Company.

One of the main features of the Bill is that it provides for a new national lottery regulator who shall be independent of the Minister. I would stress that the ongoing costs of the new regulator's office will not be borne by the Exchequer but will be covered by an annual levy which shall be paid by the operator of the next national lottery licence. The provisions regarding the regulator are set out in Part 3. Section 7 provides for the establishment of the regulator's office and for the appointment of the regulator by the Minister. Section 8 provides that until a regulator has been appointed or when the position is vacant, the Minister shall perform the functions of the regulator.

The functions of the regulator are set out in Section 9. Section 9 provides that the regulator's functions shall be to ensure that the national lottery is run with all due propriety and that the interests of participants are protected. Section 10 enables the regulator to hold or procure the holding of the national lottery on behalf of the Minister. Section 11 provides that the regulator's term of office shall not exceed seven years and that he or she may be reappointed for one additional term. Sections 12 to 22, inclusive, are general provisions relating to the regulator and his or her staff. They deal with issues such as the performance of the regulator's functions by members of his staff, disclosure of interests, and the regulator's accounts and annual report. Sections 23 and 24 deal with the arrangements for funding the regulator's office. Section 24 provides that the licence shall provide for the payment of an annual levy by the national lottery operator to meet the expenses of the regulator and his or her office, including expenses relating to staff. Section 25 provides for the issuing of a direction by the Minister to the regulator not later than two years before a licence is due to expire setting out the terms and conditions of the next licence, including its duration.

Part 4 deals with a licence to hold the national lottery. Section 26 provides that following a competition, the regulator may grant a licence authorising a person to hold the national lottery on behalf of the Minister. It also sets out a number of provisions regarding the licence. It provides, for example, that the regulator may grant a licence only to a company and that he or she must be satisfied as to the suitability and competence of the persons concerned to operate the national lottery. It also provides that a licence shall contain a code of practice regarding the operation of the national lottery which must be complied with by the operator. Section 27 deals with the circumstances in which a licence may be amended. Section 28 deals with the publication of details of the licence.

Part 5 deals with the national lottery operator. Section 29 contains a number of provisions regarding the company which a licence holder shall form to hold the national lottery and which is referred to in the Bill as "the operator". For example, it provides, where a licence expires or is revoked, that the regulator may issue a direction in writing to the licence holder providing that the company be wound up. Section 30 provides for the winding up by ministerial order of An Post National Lottery Company, which holds the current licence. Of course, An Post is still free to bid for the next licence either on its own or within any consortia it chooses. Section 31 provides that the regulator shall be required to approve the memorandum and articles of association of the operator.

Part 6 sets out the regulator's powers of enforcement. Section 32 provides for the holding of an investigation into the affairs of the operator by an investigator appointed by the regulator. Section 33 provides that the regulator may issue a direction to the operator or apply to the High Court for an order restraining the operator from breaching the Act or the licence or compelling it to co-operate with an investigation. Sections 34 and 35 deal with the imposition on the operator of financial sanctions, either by the High Court on the application of the regulator or by the regulator directly where the operator requests that the matter be dealt with by the regulator. Section 36 sets out the circumstances in which the licence may be revoked by the regulator. For example, the regulator may revoke the licence if he or she considers the licence holder to have damaged materially the national lottery or the State or the reputation of the lottery or that of the State, or if the licence holder is not taking necessary steps to prevent fraud at the national lottery. Section 37 prohibits the transfer or alienation of the licence or its use as a form of security without the prior consent of the regulator. Section 38 provides for the independent scrutiny of the national lottery by a person or persons appointed by the regulator. Section 39 provides for the appointment by the regulator, following the revocation of the licence, of a manager to take over the management of the national lottery operator and to carry on the business of the operator as a going concern.

Part 7 deals with the operation of the national lottery and the use of funds raised by the lottery. Section 40 increases the minimum level of lottery sales which must be returned to players in the form of prizes from 40% to 50%. I have given some consideration to this and the practice is that more than the existing 40% threshold is given in prizes and I want to make that minimum a matter of law. Section 41 deals with the disbursement of funds. This section sets out the good causes which benefit from national lottery funding which are - sport and recreation, national culture and heritage, including the Irish language, the arts, health of the community, youth, welfare and amenities. Other good causes may be added should the Government so decide. The Bill provides that the existing categories of good causes will remain in place. Section 42 deals with the sale of national lottery tickets. This section provides for the continued sale of tickets by authorised retailers. It also provides for the sale of lottery tickets via interactive channels, which is important as more and more business is done in that medium. It is considered appropriate, in view of the potential for developing lottery sales on the Internet, to provide for the sale of tickets through interactive channels. I stress, however, that this will be done in a way that will protect minors and vulnerable adults. Section 43 prohibits certain persons from owning a lottery ticket, for example employees of the national lottery operator. Section 44 deals with the national lottery fund at the Central Bank of Ireland, into which proceeds of the national lottery shall be paid. Section 45 provides for the approval by the regulator of national lottery games, in other words, the games will have to be appropriate and meet the standards set by the regulator. Section 46 sets out provisions relating to the names "national lottery" and "Irish national lottery" and their equivalents in the Irish language.

Part 8 concerns the furnishing of reports and information by the operator. Section 47 provides for the presentation of an annual report and accounts by the operator to the regulator. Section 48 provides that the operator shall provide the regulator with such information as the regulator may require. Section 49 provides for the sharing of certain information by the operator with the Office of the Revenue Commissioners and the Department of Social Protection. This section provides that the national lottery may disclose information only in respect of a named individual where such information is sought by the Revenue Commissioners or the Department of Social Protection. It strikes a balance between safeguarding the confidentiality of winners of lottery prizes and the need to verify whether particular individuals are compliant with the law governing tax or social welfare entitlements.

The final part of the Bill, Part 9, deals with the Gaming and Lotteries Act 1956. Section 50 provides that the Gaming and Lotteries Act does not apply to the national lottery because it will have its own overarching legislative framework, this Act. Section 51 provides that section 22 of the Gaming and Lotteries Act, which deals with advertising of lotteries, does not apply to sections 27 and 28 of that Act.

For the information of Deputies, section 27 of the 1956 Act deals with lotteries which operate under a permit issued by An Garda Síochána. Section 28 of the same Act deals with lotteries which operate under a licence issued by the District Court. Section 52 of the Bill is a technical provision. It provides for the amendment of both sections 27 and 28 in order that increases to the prizes limits set out in these sections shall in future be made by regulations made by the Minister for Justice and Equality under the Gaming and Lotteries Act 1956. Such regulations are made under the National Lottery Act. It is considered more appropriate for such regulations to be made under the 1956 Act. Obviously there are a lot of technicalities and I hope we will have time to go through them in some detail on Committee Stage. I wish to hear the views of Members in that regard.

The national lottery has been one of Ireland's success stories since its establishment 26 years ago. The Government is committed to safeguarding the national lottery and securing the continued provision of funding for good causes. It is also committed to availing of the opportunities provided by the issuing of a new lottery licence, which we must do, to raise a significant up-front payment for the State which will enable the Government to deliver a key health facility, the new national children's hospital. I am acutely aware of the value people place on the national lottery, but after 26 years we need to take stock to ensure what we propose is fit for purpose and in tune with the development of lotteries and practice after more than a quarter of a century. I commend the Bill to the House.

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