Gaming the Lottery

New game, new luck, all for a good cause?

The controversial gaming group IGT is not far where state lotteries want to expand their business. He not only sponsors the world association of lottery companies with large sums of money, but also makes decisions directly on the top management committee. This is not a problem for the Swiss World Federation President Jean-Luc Moner-Banet.

The World Lottery Association (WLA) is not a FIFA, it does not have a magnificent building on the Zürichberg. The offices of the World Lottery Association are located at Langen Gasse 20 in Basel, hidden in the office building of the Swiss lottery company Swisslos. Nevertheless: Anyone who talks about the association to insiders will repeatedly hear the comparison with Fifa. Maybe because the president is Swiss here too – and was just elected for a third term a year ago? The president of the WLA is Jean-Luc Moner-Banet and also acts as the manager of Loterie Romande from western Switzerland.

As inconspicuous as the WLA is housed, the lottery companies from around eighty countries and every continent it represents are economically potent. In 2015 alone they generated a total turnover of around 260 billion US dollars. According to the World Lotto Association, almost 30 percent of this was used for “good causes” such as promoting sport, culture and education. The association is also full of praise for itself: they “uphold the highest ethical principles” and are “committed to the highest standards of responsible corporate management”. All members must also adhere to the “highest standards in social responsibility, responsible gaming, safety and risk management”.

Growth at any price

However, research by an international network of journalists in Africa, the USA and Europe shows a completely different picture: Many of the lottery companies organized in the world association are expanding their business more and more. And that promotes gambling addiction. New games are constantly being invented, more sophisticated marketing methods are used; You should play in all situations: at the kiosk, in the shopping center, at the gas station and, of course, over the Internet. Because this is where data about the players can be generated, thanks to which they can be addressed even more directly. The organizations can find out how to do this in WLA workshops.

Surveys and scientific studies have shown that the players come disproportionately often from the lower classes. In Germany, poorly educated young men with a migration background play a lot. In South Africa, more than two thirds of all players earn less than CHF 350 per month. In fact, gambling is a bottom-up redistribution.

Examples from the USA show that individual states use the lottery revenue to lower taxes. In South Africa, winnings from the lottery business were used to pay for business class flights to the Olympic Games by sports officials and politicians, while many athletes received no support. In Mali, celebrations of the ruling party RPM are financed with lottery money.

In the United States, extensive data research has shown that individuals have won high posts dozens or even thousands of times over the past few years. This not only raises the question of whether the societies concerned really take action against extensive gaming, as they should in accordance with the WLA Code, but is also a strong indicator of manipulation.

Private company in tax havens

A particularly questionable aspect of the work of the world association – this is revealed by new research – is its relationship with the private gaming company IGT. IGT is one of the largest gaming groups in the world – and a member of the WLA. IGT is controlled by the holding company De Agostini. In 2014 the De Agostini Group bought IGT and merged it with its own gaming company Gtech. For tax reasons, the managers moved the headquarters to London, although they continue to do business primarily in the USA and Italy.

At the end of 2016, according to the US Securities and Exchange Commission, IGT parked around two billion US dollars in offshore companies, where there are no taxes at all. Thus IGT obviously violates the code of conduct of the world lottery association: Its members are not allowed to circumvent the tax laws of the respective countries in which they operate, for example by outsourcing profits to offshore mailbox companies.

IGT adheres to tax laws in all countries in which the company is active, says company spokeswoman Angela Wiczek on request. A bold claim if you look at Italy: In June 2016, IGT had to pay the Italian state a fine of 13.5 million euros for tax offenses. The previous year, on April 28, 2015, the public prosecutor had the Roman IGT offices searched and documents confiscated after initiating a tax crime against top IGT managers Lorenzo Pellicioli, Marco Sala and Renato Ascoli. And already in 2014 the company (at that time still under the name Gtech) had to pay the Italian state a fine of over 30 million euros for tax offenses.

The connections between IGT and the world lottery association are diverse. IGT sells its members, the lottery companies, comprehensive software solutions, sells lottery and gaming machines, operates casinos and organizes the lottery business from A to Z in individual states of the USA, but also throughout Italy. The German-Swiss lottery company Swisslos has some of its lottery machines from IGT Bought. In 2010 Loterie Romande purchased a new software system from IGT (or its predecessor company Gtech) worth 35 million Swiss francs. At the beginning of 2017, Loterie Romande also signed a ten-year contract for the delivery and maintenance of another software solution called “Aurora”. This should, as IGT advertises, “bring more customers and more profit for good causes”.

A give and take

IGT sponsors the World Lotto Association annually with a six-figure amount, for which IGT is referred to on its website as a “platinum donor” and can hold events at all WLA congresses.

But IGT has much greater influence: Via Fabio Cairoli, its Italian managing director, the group sits directly on the top twelve-member executive committee of the world lottery association. In addition, its president Moner-Banet previously worked as business development director for IGT and Gtech. WLA Senior Vice President Rebecca Paul Hargrove is said to have a special relationship with IGT. Several former lottery directors complained to the New York Times about Hargrove’s proximity to the company. It is said to have contributed to the explosive growth of the gambling industry, according to the newspaper. And the current lottery director of Tennessee has instructed her colleagues to give IGT contracts.

What does WLA President Jean-Luc Moner-Banet say about the allegations that IGT is influencing the world lottery society? That is not true, he says when asked: “Fabio Cairoli is a representative of the Italian lottery on the executive committee.” An absurd statement, because IGT runs the lottery business in Italy. Moner-Banet also sees no problem in the fact that Loterie Romande is a major customer of IGT. The relevant decisions were not made by him, but by Loterie Romande’s board of directors. «IGT simply made the best offer. It’s about software. We have 3000 terminals that have to be networked in real time. “

To protect the grandmother

The Swiss lottery companies Swisslos and Loterie Romande can be satisfied. With the new Gambling Act, which Parliament passed at the end of September, they have achieved almost everything: players no longer have to pay tax on their winnings below one million francs, which further increases the attractiveness of the lotteries. But a second point is even more important: in future, all Internet providers will have to block the websites of foreign gaming providers and sports betting.

However, several committees are now collecting signatures for a referendum against the law. Both the young parties of the FDP, Green Liberals and SVP and the Young Greens are bothered by the internet censorship. But a network of the Chaos Computer Club, the Pirate Party, the Internet Society and the Swiss Digital Society also collects signatures against “network blocking”. Opponents argue that not only are the bans easily bypassed, but they fear that it will set a precedent for censorship to be expanded soon. The “Addiction Switzerland” foundation is also not happy with the new law: It does not protect the population from the dangers of excessive gambling and gambling addiction. Sucht Switzerland has not yet supported the referendum.

At Swisslos you cannot understand the negative attitude: You are increasingly dealing with illegal providers. “That’s why we’re seeing a decline in sales, especially in the area of ​​sports betting,” says Swisslos spokesman Willy Mesmer. The foreign providers have distribution rates of up to ninety percent. «We can’t keep up with that. We want to be charitable. And with such odds, there is also a high risk of gambling addiction, ”says Mesmer.

The two Swiss lottery companies operate, they say, a “responsible gaming policy”. However, that is only partly true. Anyone who plays online is slowed down by betting limits. However, these do not exist for lottery stakes and ticket purchases via kiosks and other acceptance points. Loterie Romande also operates 700 electronic lottery machines in 350 restaurants and bars in western Switzerland. According to statistics from the Federal Office of Justice, it generated sales of well over CHF 800 million in 2016 – and distributed almost 90 percent of it to the players as profit.

To prevent gambling addiction, the staff in the restaurants and at the other acceptance points are trained, says Willy Mesmer: “If you see that a grandmother is wasting fifty francs a day, you should speak to them.”