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| GREAT GAMBLER: Zee's Subhash
Chandra hopes to reap a rich harvest |
PV.S.A. Gupta
curls his finger against a light-blue touch screen with dazzling logos
on an ATM-sized box and launches into an elaborate explanation of the
four-second journey of the "online" lottery. It turns out to
be quite simple: a game payslip with six crossed numbers, priced at Rs
10-20, is inserted into the metallic box located at a retail outlet. Within
nanoseconds a high-speed scanner validates the numbers and out pops a
lottery ticket. During those precious seconds, information from the lottery
machine has been flashed to a master terminal with the help of a v-sat
dish (see graphic).
It is clean fun. More importantly, the online system offers little scope
of manipulation. Every sale online is logged on computers maintained by
the government and, unlike in paper lottery, there can be no short-printing
of tickets. Besides, the draw of lots will be telecast live.
By July end, Gupta, director of Delhi-based Techno Serv (TS), will stake
his lot in India's newest gaming industry. The name "online lottery"
though is misleading. This isn't e-lottery and the metallic boxes will
not be connected through the Internet. But the stakes are high. The Indian
paper lottery industry has an annual turnover of Rs 50,000 crore. Accounting
giant PriceWaterhouseCoopers (PWC) have estimated that the turnover of
India's online lottery at a staggering Rs 20,000 crore at the end of the
first year and Rs 1,00,000 crore by the end of the fifth. This, when only
14 states allow lottery operations. Now Delhi, Himachal Pradesh and Rajasthan
are keen that the touch-screen boxes spring to life, given their revenue
potential. Nobody now talks of the Lottery (Prohibition) Bill, piloted
in Parliament in 1999 by Union Home Minister L.K. Advani for "malpractices
in the conduct of paper lotteries".
The queue for a share of the online pie is getting longer. Computer
Aided Information and Research Services (CAIRS), promoted by Ashwani Khurana
who dominated Indian paper lottery for a decade, has bagged the distribution
rights of Nagaland Lottery. Playwin Infravest Pvt Ltd, promoted by the
Essel Group that runs Zee TV, started operations last week as agents of
the Sikkim Government in Maharashtra and Karnataka. TS has tied up with
M.S. Associates (MSA), owned by relatives of Lok Sabha member M.K. Subba,
for distribution of Meghalaya Lottery. MSA had jointly bid for the licence
with the NRI-backed Surawongse Properties. In the fray for distribution
rights also are Videocon, Sony, Ispat and Lalit Modi's Modi Enterprises.
Says Sanjay Das, CEO, Playwin: "We are set to change the face of
the lottery industry and the very meaning of entertainment."
One can't dispute Das on that. The glitzy machines, being set up at
superstores, coffee bars, ice-cream parlours, book stores, cyber cafes
and the like, promise to be an instant hit. The sheer scale of investment
suggests that entertainment is being redefined. The MSA-TS combine is
investing Rs 1,600 crore on 33,000 machines over the next three years
(each costs around Rs 4 lakh, including expenditure on v-sat dishes).
By July end 7,500 of them will be in place in various states. Khurana's
group is investing Rs 220 crore in the first year on 5,000 machines made
by European leaders Wincor Nixdorf of Germany. Playwin is investing about
Rs 300 crore on machines manufactured by International Lottery and Totalizator
Systems of the US. Others are likely to pump in another Rs 500 crore when
they hit the market. Says Khurana, who opted out of paper lottery two
years ago when a series of scams were unearthed: "In paper lottery,
honest operations had become difficult. Online lottery, in comparison,
is genuinely transparent." Every sale proceed will be electronically
credited to a government bank account and the bank will then transfer
the money to the lottery operator's account after deducting the government's
share.
Transparency is only one of the reasons why things are looking peppy.
Revenue projection is another. Australian consultancy TMS Global Services
estimates that CAIRS will record a turnover of Rs 1,026 crore in the first
year, with the figure rising to Rs 4,217 crore by the end of the fifth
year. Reports prepared by PWC and Q-Lot of Sweden suggest that based on
its investments the MSA-TS combine's turnover will be about Rs 10,000
crore in the first year and Rs 30,000 crore at the end of the fifth. "We
are also looking at hooking up to the web so that those in non-lottery
states like Delhi can play the lottery using credit cards," says
Alok Pandey of MSA.
Profit margins in the lottery trade are not very high, but the volumes
more than make up for them. After paying the prize money (about 50 per
cent of turnover), minimum guaranteed revenue to the states (between 5
and 25 per cent), distributor commissions (7-8 per cent), advertisement
expenses (Playwin, for instance, has a Rs 35 crore ad budget) and interest
on institutional loans, profits would amount to just about 8 per cent.
In the West, revenues from online lottery have been utilised to build
infrastructure. American universities like Harvard, Yale and Brown were
financed by lottery earnings, as were hospitals, roads and bridges. In
Northern Ireland, lottery money funds arts infrastructure and heritage
in cities like Belfast. In India where, unlike in the US, one state lottery
can operate in another state, things look brighter. Already the high-speed
scanner has begun to attract the middle class. Says Gajraj Mohanlal, 45,
a stock broker from Mumbai who won Rs 91,000 through a Playwin machine
on March 29 this year: "I'll now use the money to pick up some more
shares from the market. It's fun."
Mohanlal, or for that matter all the participants that day, failed to
win the Rs 2 crore jackpot, but in the coming weeks there will be a long
line of "crorepatis". That means the metallic boxes will be
crunching numbers overtime. No wonder by the time Gupta finished his story,
his face, like the touch screen before him, had an incandescent glow.
-with Sandeep Unnithan
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CURRENT
ISSUE APRIL 15, 2002
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