The new Government Lottery Office headquarters on Sanambin Nam Road in Nonthaburi is a gleaming modern glass and concrete monument to the agency’s achievements, complete with a helicopter landing pad on the roof.
Taking a gamble: The Government Lottery Office’s new state-of-the-art headquarters on Sanambin Nam Road in Nonthaburi. Photos: Jits iree Thongnoi
Built at a cost of more than one billion baht, the eight-storey earthquake-proofed curved structure is a far cry from the old 19th century GLO headquarters on Bangkok's Ratchadamnoen Avenue, which were vacated a year ago. The old headquarters was the subject of bombing and arson attacks over the decades due to claims that lottery revenue — the biggest cash cow for any Thai government — was being abused and funds siphoned off by various administrations.
Even the new GLO headquarters was bombed in the lead-up to the May 22 coup, and was also besieged by angry rice farmers demanding payment for their crops under the failed rice-pledging scheme.
Now the GLO is facing even more pressure from the ruling junta, which wants lottery tickets sold at their face value of 80 baht in fairness to punters who pay inflated prices for tickets as they are sold on down the distribution chain. But that demand raises serious headaches for the GLO and its cosy arrangement with five main distributors, or “tigers”, who buy the bulk of the tickets.
“We cannot control the whole distribution trail,” Kunthira Tantirangsi, the acting GLO chairwoman, told Spectrum on Tuesday, a day before the price cap was due to come into effect.
But Sangsidh Piriyarangsan, an economics researcher from Rangsit University who has studied both the legal and underground lotteries, believes the GLO must exert regulatory control over the entire distribution trail.
“If the GLO says it’s beyond their ability to regulate distribution trails, meaning they only regulate the top chain of distribution while overlooking the bottom chain, I’d say they do not practise good governance,” he said.
“They are responsible for this product wherever it is in the market.”
TICKET TO RIDE
The average punter might be surprised to find out that the price for the lottery ticket they buy from vendors on the street is sometimes around 50% more than what it was when issued by the GLO.
tough talk: The NCPO has ordered the GLO to control the retail price of lottery tickets. Photos: Jiraporn Kuhakan
The difference can be even greater when discounts to wholesale bulk buyers and charities are factored in. The face value for two half tickets, which must be sold in pairs but can be reclaimed individually, is 80 baht.
The 1974 Lottery Act stipulates that the GLO provides discounts for private distributors at 7% per ticket, meaning distributors get the tickets at 74.40 baht per pair. If the distributors sell a ticket at face value on the street they have already made 5.6 baht profit.
As it does not have its own retail or distribution system, the GLO sells the tickets in bulk under a quota system. Experts and academics say a group of main distributors — known widely as the “Five Tigers” — gains control of most of the tickets issued under quotas by being allocated them directly or buying them off other wholesalers and associations allowed to buy tickets.
Of the 72 million half tickets issued by the GLO for the fortnightly draw, the Five Tigers purchase an estimated 65%, Mr Sangsidh said. The rest go to charities and registered retailers. Charities get a 9% discount on the face value of the tickets.
The Five Tigers have been identified in local media as Lak Mahalarp, Diamond Lotto, Yardnampeth, Pluemwatthana and BB Merchant. Effective control of the Five Tigers has been consolidated to three “very wealthy and powerful” individuals, said Mr Sangsidh, who declined to name them.
The Tigers then sell on their tickets to major distributors, who in turn sell them to smaller distributors who ultimately sell them to street vendors.
Along the chain, the sale price is increased so all make a profit, until it reaches the street vendor, who must often sell the full ticket at 100-120 baht to make a small profit.
If the ticket price is fixed, and enforced, at 80 baht, the entire distribution chain, with the Five Tigers at the top and taking most of the pie, is in danger of collapsing.
DO WE LOOK HAPPY?
In late June, a week before the lottery price cap was due to be introduced by the National Council for Peace and Order, ticket sellers and buyers near the old GLO headquarters on Ratchadamnoen Avenue were angry and anxious.
“The NCPO says it wants to return happiness to the people. I don’t feel that way at all,” said Pa Tae, a grey-haired woman who has been selling lottery tickets for more than four decades.
warned: Ticket sellers have been told to keep prices down to face value.
In the distribution chain, Pa Tae comes at the penultimate stage. She buys tickets from minor distributors and sells them to street vendors.
In her bag she had several lottery ticket books, each comprising 100 full tickets, and she paid 8,350 baht for each book, or 83.5 baht per full ticket. She hoped to sell the tickets at 30-50 baht more than what she paid for them, but there seems little hope of that.
At the small lottery market across the road from the GLO office, small vendors from around the country have come to bargain. As an indication of things to come, municipal officials stand nearby checking lottery prices and warning sellers not to overcharge, otherwise their tickets will be confiscated.
Apple, 29, is a street vendor at the very end of the distribution chain. She said she bought a book days before for 9,100 baht. If she does not sell the tickets for 100-110 baht she will not be able to repay her loan sharks or cover the cost of unsold tickets.
Apple argued that people aren’t forced to buy lottery tickets, so if customers are happy to pay the price asked by the sellers there is no need to fix the price.
“My situation is already very difficult without these measures to curb lottery ticket prices,” she told Spectrum. “How can you control ticket prices when a glass of ice is as high as two baht? I won’t be able to even afford that if I'm forced to sell a lottery ticket for 80 baht.”
A number of northeastern villagers, most from Amphoe Wangsapung in Loei province, travel to Bangkok and work as lottery sellers in the rice farming off-season. Three or four of them typically rent and share a room for 1,500 baht a month.
“A week before they announce the lottery winners on the 1st and 16th of every month I travel to Bangkok to buy tickets from distributors and stay until the announcement is made,” said Pa Orn, 53, from Amphoe Wangsapung.
Pa Boon, 52, from Ubon Ratchathani province, has been selling lottery tickets during the off-season for the past 20 years. “I bought the lottery tickets at 93 baht each this morning. How can I resell them at 80 baht?” she asked. “I took loans to come to Bangkok, and what about my bus fare back to Ubon, what about my kids’ pocket money?”
WELL, THAT WENT WELL
Last Wednesday, the day the price cap was introduced, the mood at the country’s largest lottery market, the Lottery Shopping Centre, conveniently located a stone’s throw from the new GLO headquarters, was hostile.
The centre resembles a modern open wet market, occupying a large space with ticket lots spread out on tables like the catch of the day. Many vendors refused to be interviewed and photographed when Spectrum visited. One said we needed to ask permission from the person who owns the market before we could ask any questions.
In front of the market, a group of vendors stood around discussing the lottery price curbs. Many were not happy. Many swore. Many said something about the “sixth tiger”.
Despite the atmosphere, a few vendors from upcountry were walking around with a small rucksack hoping to make purchases. Middle-class, urban-looking vendors were also loading up their vehicles with a few big plastic bags of lottery books.
Tickets are packaged in groups of 10 to make them more attractive to potential buyers. The six-digit lottery pays a smaller prize if the final two digits match. A buyer may believe the number “57” is lucky that week, so several tickets with the number 57 or digits five and seven could be arranged into a package of 10 tickets.
Mr Sansidh said grouping the tickets this way is an indication that they have been bought in bulk and grouped in such a manner.
an eye on the future: Kunthira Tantirangsi, acting GLO chairwoman.
Thanakorn Komklit, coordinator of the People’s Network for Lottery Reform, explained the Five Tigers' approach. “After securing a large amount of lottery tickets — either through contracts or through buying from other companies which have obtained a lottery quota — the major distributors set the price arbitrarily as they control a large part of the lottery market,” he said.
“They then ‘manage’ the tickets to increase sales as customers always want to buy their desired numbers in large quantities.”
Bird, 48, a Bangkok lottery vendor, explained that of the 100 tickets in a lottery book, 30-40 are considered “nice numbers” that are in high demand, are easy to sell and can demand higher prices from punters. The remainder command lower prices or are left unsold.
“Either the GLO has to buy the leftover tickets back, increase the margin for small vendors or fairly run the quota system so minor sellers get as many as possible,” Bird said.
Mr Thanakorn said the intimidating reputation of the Five Tigers means the GLO lacks the ability to run a fair quota system that takes into account the needs of small vendors. If handled correctly, it can can be another way to curb overpricing, he added.
Pa Bangorn, 61, from Nakhon Sawan, is a small vendor trapped in the system. She is a registered individual vendor in her home province, and every month she gets two to three lottery books to sell. She transfers money to a GLO bank account and takes the pay slip to the town hall to receive tickets at a discounted rate of 9%, as stipulated in the 1974 Lottery Act.
But the number of tickets she is legally allocated is not enough. Every two weeks she travels to Bangkok to buy tickets from private distributors. The extra tickets she buys, in order to increase profits, are funded by loans and money collected by other vendors.
Manop Jakujan, from the Association for Supporting an Occupation for Cripples of Thailand, said his organisation is given a quota of 150 ticket books a month, comprised of 50 tickets in each book. The allocation comes under the GLO’s charity quota with a 9% discount rate.
He said the law needs to be amended to provide more discounts for retailers who have to shoulder a higher cost of living. The 1974 Lottery Act has not been amended since its inception.
GLO RESPONSE
Acting GLO chairwoman Mrs Kunthira admits the lottery system has inherent problems, but argues the agency is doing its best to resolve them.
“Lottery problems persist because the product has its own limitations,” she told Spectrum. “The number runs from the tickets cannot all be nice and the GLO cannot change the running of the system. Once the distributors take the lottery tickets, they shoulder the risks themselves.”
Mrs Kunthira said the GLO currently has around 30,000 private registered individual retailers nationwide and more than 60 registered private legal entities. Together they share 69% of the 72 million half tickets, or 50 million, issued in each draw. The other 31%, or 22 million tickets, are allocated for associations, such as those helping veterans and the handicapped.
Mrs Kunthira admits controlling distribution is a tough job as the GLO has no capacity to investigate acts of dishonesty. She said the GLO has the ability to cancel an annual contract with a distributor when an agreement is broken, but there are no signs any of the current contract holders have done so.
“Moreover, rotation [of the quota contracts] or more access to lottery tickets for small vendors through direct selling, for example, would not prevent lottery investors employing agents to obtain lottery tickets anyway,” she said.
The GLO is a state enterprise under the supervision of the Ministry of Finance. As stipulated in the 1974 Lottery Act, the office only has four obligations: to print and distribute the lottery tickets and to announce and pay the lottery winners. The act also stipulates the office contribute 28% of its income to state coffers.
“Our main task is to contribute to state revenues, amounting to 1.12 billion baht a month currently,” Mrs Kunthira said.
But Mr Tanakorn of the People’s Network for Lottery Reform is critical of the GLO’s structure, said that because all these tasks are carried out by one office, the procedures usually lack transparency as checks and balances are not applied.
Mrs Kunthira insists the GLO's obligations are carried out with transparency, with a nine-member board presiding over all procedures. Currently, Somchai Sajjapong, the Customs Department director-general, is the board chairman, as stipulated in an order issued by Gen Prayuth Chan-ocha on June 28. He replaced the former chairman, Rakop Srisupaat, who resigned.
The GLO is in the process of recruiting a new board chair, who will automatically become a GLO board member. No new regulations will be issued or come into effect until the new chair assumes office.
STICKY FINGERS
Rangsit University's Mr Sangsidh was blunt in his criticism of the GLO. He alleged the GLO had to do away with political intervention that tarnishes its operations, particularly in the area of quota provision relating to the Five Tigers.
“According to my study and inside sources, the three men that make up the Five Tigers paid cabinet members prior to the May 22 coup to secure the lottery quota,” he alleged. “Therefore, distributors force consumers to shoulder their commission cost as well.”
Since the junta’s announcement last month that it was capping lottery prices, the state budget monitoring and scrutiny committee has not released any solid measures to control pricing, regulate the market and deal with the lottery system in the long run.
Mr Tanakorn said whoever is in power should reassess the established view that the lottery is simply a government revenue raising measure. “The Ministry of Finance sees the lottery as a government product, a means to garner state income in the form of non-tax revenue,” he said.
“Society, especially the state, needs to see lottery for what it is: gambling. We legalised the lottery to curb gambling by bringing it into the system. Seeing the lottery as a profitable product only allows for more ways of gambling being employed as a means to collect revenue, and in turn, the public suffers from gambling addiction.”
Mr Sangsidh believes that view is outdated. “The opinion that the state needs to control people’s addiction to gambling is quite outdated. It is the people’s right. If you ask lottery buyers what chance they have of winning, the answer will always be less than 50%. Most people buy lottery tickets for excitement. At the end of the day, most of them do not really care if they’re winning.”
Both Mr Tanakorn and Mr Sangsidh agree that a fund should be set up to manage lottery revenue that can be spent on education, youth and elderly welfare, as well as on campaigns warning of the dangers of irresponsible gambling. Mr Sangsidh also said the Lottery Act should be amended to exclude the GLO’s duty to garner state income. Online lottery ticket sales could be a long-term solution to the pricing problem.
“The NCPO can make distributors and vendors cooperate for the time being,” he said. “But we need online lottery vending machines. No distributors would be needed and people aged under 18 would be prevented from buying tickets as they would have to put in their ID number to buy them.”
Mrs Kunthira said in the future she sees more product choices in the market. “The long-term approach is to increase the options in the market. If we have more lottery products in the form of an online ticket vending system, the public can have access to various forms of lottery, and in turn the price of tickets will eventually fall,” she said.
