Public Lotteries: report for 2009.

STATES OF JERSEY

PUBLIC LOTTERIES: REPORT FOR 2009

Presented to the States on 15th March 2010 by the Minister for Economic Development

STATES GREFFE

2010   Price code: C  R.28

REPORT

Introduction

The  Minister  for  Economic  Development,  in  accordance  with  the  provisions  of Regulation 4(4) of the Gambling (Channel Islands Lottery) (Jersey) Regulations 1975, is pleased to submit to the States a report of the Public Lotteries promoted from 1st January 2009 up to and including the Draw of 17th December 2009, together with an income and expenditure account and balance sheet.

Overview of the Channel Islands Lottery

Policy for the Lottery in 2009 was decided by the Assistant Minister for Economic Development in Jersey, Connétable L. Norman and the Culture and Leisure Member in Guernsey, Deputy F. Quin.

Public Lotteries Board

The Public Lotteries Board is constituted in accordance with Regulation 3 of the Channel Islands Lottery (Jersey) Regulations 1975, as amended, for the purpose of advising  the  Minister  on  general  matters  connected  with  the  Lotteries  and  for conducting the Draw held in Jersey. Its Members in 2009 were –

Mr. I.T. Barnes (Chairman) Mr. P.S. Cruickshank

Mr. D.A. Wallis

Mr. G.J. Roscouet

Ms M. Horton

Mr. A.J. Arnold

Dr. J. Lane (Secretary)

On 20th October 2009, Mr. Adrian Garnier was appointed as a new member of the Board as the Regulations require a Chairman and not less than 6 other persons to be members of the Board. After leaving Bournemouth University School of Finance and Law in 1999, Mr. Garnier has been involved in the banking and finance industry.

The Board retains a vital function, providing continuity of experience to the Minister. The Board meets quarterly and without the individual contribution of its Members, the C.I. Lottery would not have been able to continue.

The Policy of the Minister for Economic Development

In  keeping  with  recent  practice,  the  States  approved  the  Minister's  Report  and Proposition presented to the States on 17th November 2009, asking for approval that the total Jersey portion of the profits of the Channel Islands Lottery for 2009 and 2010 should be paid to the Association of Jersey Charities for the benefit of the community and the charitable needs of the Island. The Proposition also had States approval to set aside as a reserve, 10% of the Jersey surplus for 2009 and 2010.

The remaining 90% profit, according to the provisions of Regulation 4(5) of the Gambling (Channel Islands Lottery) (Jersey) Regulations 1975 would be applied in such manner and for such purposes of public benefit as the States shall from time to time by Act direct. It was the Minister's recommendation to the States that these funds be granted to the Association of Jersey Charities. This recommendation follows that agreed by the States in 2008 when £445,414 (80% of the total) was granted to the Association. On this occasion, because of the pressure on funding as a consequence of the economic climate, the Association had requested the Minister to now retain a 10% reserve rather than the previous 20%.

The  proposed  transfer  of  10%  of  the  Jersey  profits  from  2009  and  2010  to  the Accumulated  Fund  was  to  maintain  a  contingency  for  the  Association  of  Jersey Charities should sales of the Channel Islands Lottery decline.

The grant due to be paid to the Association of Charities for the year is £305,791, a decrease of £139,623 on 2008. This is because the 2008 surplus included an estimate for uncollected prizes paid which was lower than the actual prizes paid in 2008. The Association therefore benefited from a higher surplus in 2008 and this has had to be corrected in the 2009 accounts.

Having undertaken a public consultation on the future of the lottery, it is clear that there is a strong belief that the Islands should continue their own public lottery until there was a clear indication from both the States and Parliament that extension of the U.K. National Lottery was a realistic proposal.

To that end, the strategy in 2009 was to –

• continue  the  Two  Super  Scratch  Games'  from  January  2009,  until  the Christmas Bumper Draw in December 2009;

• ensure  that  any  future  modernisation  of  the  Island's  gambling  legislation should take account of the needs of charitable and other good causes; and

• continue the information gathering process on the potential for the extension of the National Lottery to the Islands.

Main Agents

The  Minister  maintained  two  appointed  Main  Agents  to  act  on  his  behalf  in distributing tickets in the Island.

The Main Agents were –

Mrs. S. Le Brocq

Mr. and Mrs. M. Vowden

The two Main Agents purchased tickets at a discount of 13% for all the Games including the Christmas Draw.

All agents, including sub-agents, were offered an additional commission equal to 1% of any winning ticket sold by them of a value of £750 or more. The agents, however, had to register with the Regulation and Licensing Manager and purchase a special

stamp number to stamp the reverse side of all tickets sold by them, in order to receive the ex-gratia payment.

The Minister records his appreciation to the Main Agents for their hard work and enthusiasm during the year.

The Lottery Game

The prize structure for the games introduced in January 2009, were as follows – Super Scratch Game 3

Prize structure per 200,000 tickets –

2 Prizes of

10 Prizes of

50 Prizes of

200 Prizes of

500 Prizes of

2,000 Prizes of 5,000 Prizes of 40,000 Free Tickets Total Prizes

£20,000  = £500  = £100  = £25  = £10  =

£5  = £2  = =

£40,000

£5,000

£5,000

£5,000

£5,000

£10,000

£10,000

£40,000

£120,000 = 60% return

Win ratio = 1:4.19

Sales for these games were very successful throughout the year, selling out at a rate of approximately one game every two months. Two different design games were on sale at the same time with the same prize structure for each game.

The Christmas Charity Draw

The  planning  and  promotion  of  the  Christmas  Charity  Draw  remains  the  most important of the year and continues to draw significant public interest and support. In order to maintain this, both the Assistant Minister in Jersey and the Culture and Leisure Member in Guernsey were strongly of the opinion that the First Prize had to be seen to be rising steadily and it was agreed that the minimum First Prize would start at £300,000.

Two million tickets were printed for this draw, 300,000 extra than in 2008, as once again tickets had sold out several days before the draw in 2008. This proved successful and tickets remained available in Jersey up until the day before the Draw.

The Minister is delighted to report that all tickets were sold from a Jersey issue of 1,240,000 tickets, representing an increase of 180,000 (17%) on Jersey sales over the previous year.

Guernsey sold 760,000 tickets, representing an increase of 162,300 (27%) on their sales over the previous year, amounting to a joint sales level of 2,000,000 tickets by Lottery Day. This represented an increase of 342,300 tickets on the previous year. The Channel Islands Lottery achieved a top prize of £651,000, exceeding the £553,000 achieved the previous year.

Finally, special mention must be made of the vital part played by the Islands' media for broadcasting and printing the daily press releases, which played an invaluable part in the successful promotion of the Draw.

The Lottery Show

The only Lottery Draw to be broadcast by Channel Television was the Christmas Charity Bumper Draw. The appreciation of the Minister goes to Mrs. Karen Rankine, Managing Director (Broadcast) and the staff at Channel Television for their continued support.

Marketing and promotion

Marketing for the Lottery was undertaken by the Departments' Officers in both Islands. The result was an imaginative and colourful campaign transmitted through poster, press and television that provided a very positive message.

The year's ticket sales

Ticket sales for the year (inclusive of the Christmas Draw) showed an increase over the previous year, with Jersey sales 4.37% up over the previous year. Guernsey sales were up 6.84%, giving a combined sales increase of 5.36% year on year. Of the total 3,550,300 tickets sold across the Islands 2,104,000 were sold in Jersey and 1,446,300 in Guernsey[1].

There were 9 scratch card games promoted throughout the year. 1,550,300 tickets were sold in total (864,000 tickets in Jersey and 686,300 in Guernsey). Jersey sales were down 9.6% and Guernsey sales down 9.2%.

Channel Islands Lottery (Jersey) Fund

The Channel Islands Lottery is administered and governed by the Public Lotteries Board, which is constituted in accordance with the Channel Islands Lottery (Jersey) Regulations 1975.

The States of Guernsey contribute 60% of their gross sales to the prize fund each year. The remaining 40% is retained by Guernsey to cover their costs of administering the Fund. Unclaimed time expired prizes are shared between Guernsey and Jersey in accordance with sales ratio.

The Lottery website at www.gov.je

Once again the Lottery results for the Christmas Draw were made available through the States of Jersey Website.

The Association of Jersey Charities

Founded in 1971, the Association of Jersey Charities now represents approximately 248 Jersey charities. The Minister continued to support their efforts for local charitable causes  and  recognised  the  importance  of  Channel  Islands  Lottery  profits  as  the mainstay of the Association's funding. The provision of the States grant is governed through a Service Level Agreement.

Grants by the Association are ordinarily only available to its members from the second year of membership and are considered at each of its Quarterly Meetings. Applicants must first make formal written application describing the use to which the grant would be applied and then, at the meeting, give a short presentation and answer questions from the membership. No grant is made in excess of £20,000 to any member during the same financial year in order that the greatest possible number of charitable causes may benefit from the funding. Not all applications are successful and undergo strict scrutiny.

The relationship whereby the Minister is able to delegate awards to the Association, who are then able to assist its membership, works well. The grants approved in 2009 by the Association of Jersey Charities are listed below and illustrate the very real benefits accrued by Lottery profits for local good causes.

List of applications approved in 2009 (from the 2008 Grant)

Art in the Frame Foundation – Rent and electricity  £6,000.00 Trinity Youth Club – Shortfall of youth worker salary  £17,241.00 Friends of the Bridge – Café manager salary  £20,000.00 TOP – Volunteer training  £1,500.00 George V Cottage Homes Residents Association – Indoor games and travel costs  £400.00 Jersey Sea Cadets – RIB  £16,514.00 Jersey Domestic Violence Forum – To host annual conference  £15,000.00 Jersey Child Care Trust – New computer and leaflet reprint  £14,699.00 Grace Trust – Part time administrator  £7,392.00 Weston Health Care Foundation – Part time manager and refurb  £20,000.00 Les Amis – Wheel chair vehicle  £20,000.00 Ace of Clubs – 2 staff plus travel costs  £14,690.20 Stroke Association – Leaflet translation and projector  £4,685.60 Roseneath Trust – Paint exterior of building  £17,650.00 Boys Brigade – Repair, redecoration and equipment  £20,000.00 No. 7 Overseas (Jersey) Squadron – Flight simulator  £9,000.00 Les Amis Incorporated – Replace old vehicles  £20,000.00 ACET Jersey – To continue HIV/AIDS education  £20,000.00

Jersey Mencap - To run 2nd stage of Art skills  £10,669.49 British Red Cross Society Jersey – To employ a youth and schools manager  £20,000.00 Jersey Women's Refuge – To cover one outreach salary  £20,000.00 Jersey Citizen's Advice Bureau – Refurbishment, new server, costs  £20,000.00 Alzheimer's Disease Society Jersey – Training costs  £18,600.00 Brighter Futures – Outreach facilitator  £19,672.00 Silkworth Lodge – Refurb bathrooms  £4,313.00 JCOA – Refurb of bedrooms  £9,900.00 CCT – Development officer website printer  £19,754.99 Causeway Association – New toilet and new carpets  £10,146.60 Roseneath Trust – Deputy manager salary  £20,000.00 Headway – Refurb of centre and shop  £20,000.00 TOTAL  £437,827.88

The administration charge

A charge of £4,300 is made to the Culture and Leisure Department in Guernsey as a contribution in respect of work undertaken for the administration and management of the Lottery.

States Treasury recharges

The Department has a Service Level Agreement with the Shared Services Division of Treasury  and  Resources  for  financial,  administrative  and  audit  support  with  the C.I. Lottery. This includes services such as preparing accounts on behalf of both Islands, reconciling winning tickets, paying commissions, auditing accounts and being present  at  the  Christmas  Lottery  Draw  and  for  which  the  Treasury  charges  the Department a fee. Part of the 2008 fee from Treasury was not taken until 2009, therefore the fee for 2008 was £9,203 and in 2009 £34,981.

The final accounts for the C.I. Lottery (unaudited) up to December 2009 are noted overleaf.

Channel Island Lottery (Jersey) Fund

Fund/Reserve  Surplus for the year of £33,978 a decrease of 69.5% on 2008 Highlights:  Jersey ticket sales increased by 4.8%

Purpose of Fund

The Channel Island Lottery is administered and governed by the Public Lotteries Board,  which  is  constituted  in  accordance  with  the  Gambling  (Channel  Islands Lottery) (Jersey) Regulations 1975.

The States of Guernsey contribute 60% of their gross sales to the prize fund each year. The remaining 40% is retained by Guernsey to cover their costs of administering the Fund. Unclaimed time expired prizes are shared between Guernsey and Jersey in accordance with sales ratio.

In 2008 a grant of 80% of the total profits was made to the Association of Jersey Charities. In 2009 a decision was made by the States to increase the grant to 90% of the total profits for the benefit of the community and the charitable needs of the island.

Actual vs prior year

The decrease in surplus from 2008 to 2009 was 69.5%. This was due to Guernsey prizes in 2008 being under accrued for resulting in a larger surplus being reported in 2008 and an increase in the percentage due to be paid to the Association of Jersey Charities from 80% (2008) to 90% (2009) of the Fund's profits.

Key financial results of the Operating Cost Statement

Sales of tickets  Ticket sales of £2,980,213 a decrease of £376,587

(30%) on 2008

In 2008 Guernsey ticket sales were shown gross, however, in 2009 they are shown as Guernsey's contribution to the prize fund and hence are net of 40% of sales retained by Guernsey to meet their administration costs. Ticket sales by Guernsey and Jersey increased in real terms by 4.8% and 7.8% respectively.

Other revenue  Other revenue of £540, a decrease of £118,679

(99.5%) on 2008

In 2008 other revenue included time expired prizes but in 2009 they are reported as a reduction in the prizes paid within other operating expenditure.

Supplies and  Supplies and Services of £480,404, a decrease of Services

£424,550 (46.9%) on 2008

The expenditure for supplies and services has decreased due to the net affect of Guernsey administration costs no longer being reported in 2009, staff costs now being recharged as part of supplies and services and commission due to agents now being accrued for in the accounts. In real terms supplies and services have increased by 12.6% due to increases in printing and advertising costs and a recharge in 2009 for the central administration of the Fund during 2008 and 2009.

Grants and subsidy  The grant due to be paid to the Association of payments  Charities of £305,791, a decrease of £139,623

(31.3%) on 2008

The grant due to be made to the Association of Jersey Charities for the year is £305,791, 90% of the profits prior to calculating the grant, compared to 80% in 2008. The 2008 surplus included an estimate for uncollected prizes paid which was lower than the actual prizes paid in 2008. The Association therefore benefited from a higher surplus in 2008 and a lower surplus in 2009.