The profitable and problematic Thai lottery
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The profitable and problematic Thai lottery

WHILE Saraphee Rukthong was looking at a termite hill in her house, a black cobra snake popped its head out from the hill. Many would have led and called for help, but Saraphee saw it as a sign of good fortune and instead made the snake an altar. As soon as people in nearby villages found out about the snake, they traveled to her house to pray and gaze at the cobra  trapped in the termite hill. They believed such bizarre sight must mean something, and if they looked hard enough  winning lottery numbers might be revealed to them. After rounds of interpretation, these lotto lovers decided that “10” would win the two-digit prize.

Although the number turned out to be, of course, “34″, Saraphee, the cobra and their visitors all contributed to the success of the Thai lottery industry – the monopolistic cash cow that the junta wants to whip into line.

Fueled by superstitious beliefs as well as dreams of overcoming poverty overnight, lottery is a big business in Thailand. Around 19.2 of 67 million Thais buy the government lottery, totaling 76 billion baht (US$2.3 billion) last year, according to the Family Network Foundation’s secretary Wanchai Boonpracha. Unlike in most countries, where the government’s lottery office licenses and monitors the lottery business, the Thai Government Lottery Office (GLO) itself prints and sells the tickets to distributors. Thanks to strict laws that forbid any gambling activity and makes the government lottery feel like the only legal casino, the GLO has been pocketing 28% of the profits, around 13-14,000 million baht annually in the past several years, for the state.

Outside the law, though, underground lotto or huay dealers around the country have been operating with 4-5 times larger cash circulation, around 4-500,000 million baht per year, according to Assoc. Prof. Dr. Sungsidh Piriyarangsan, dean of the College of Social Innovation RSU. Using the numbers drawn in the official lottery, these dealers offer better prizing, credit purchases and more betting options. Since you can open a small underground lotto business with just a notebook and a pen, they are all over the place, and an effective crackdown is impossible.

That was part of the rationale behind the Thaksin government implementing the “aboveground huay” during 2003-2007, allowing the consumers to pick their own 2-3 digit numbers rather than having to rummage through the regular 6-digit tickets where the numbers are already chosen. Although it did put a dent in underground lottos’ business and doubled the GLO’s revenue, this profitable format was ruled against the law, deemed as accommodating lottery addiction, and eventually cancelled. The GLO has since continued with only the traditional lottery.

While that “aboveground huay” model was illegal and ethically questionable, the traditional lottery business model also stinks. The public has always been suspicious of how the GLO deals with the sales margins and profits behind the curtains. Contract distributors are believed to have been bagging easy profits by selling to smaller distributors, who then sell to vendors at the bottom of the chain, who then bear higher costs for lower profits.

Recent probes by three investigative news agencies, Isra News, TCIJ and ThaiPublica, cast even more suspicion on the roles of the three biggest long-term contract distributors. With their big lottery quotas and business allies, they have an almost monopolistic power in the market and can influence the lottery retail price, Dr. Sungsidh told Thaipost. Their secret to their longevity through a decade of regulatory efforts has nothing to do with luck, but a strong connections.

Dealing with the Thai lottery has always been problematic because it means balancing the weight of a significant revenue source, the ethical issues of endorsing gambling, and pressure from powerful politicians. That’s why when the junta under General Prayuth Chan-ocha vowed to solve the lottery price problem a month after last year’s coup, the public couldn’t wait to see what it was going to achieve. The junta then appointed its own man Maj Gen Apirat Kongsompong as the chair of the GLO’s board, and after months of no results, the general came out to confirm there are price-fixing parties who are connected with people in the GLO but chose not to reveal any names.

Earlier this month, the junta reignited its attempted reforms by evoking the Section 44 to put more people from the government on the GLO’s board and introduce a new profit model that will include a new charity fund for social development managed by the new board committees. General Prayuth also declared anyone selling lottery tickets above the regulated 80 baht (US$2.40) will face jail.

Like gazing at a snake stuck in a termite hill, the junta exercising its absolute power on the price of lottery tickets, which are not necessity goods, may seem like a misplaced effort. On the other hand, though, it could indirectly force contract lottery distributors to play by the rules. In any case, the junta, like every Thai, knows well the inflated lottery price is just an end product of a faulty system that needs a true solution backed by the courage to to implement an accountable, transparent structure. Otherwise, the money will just change hands. Just like gambling, power is addictive, and without consciousness, both usually come to an ugly end.