Turning lotteries into retirement funds
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Turning lotteries into retirement funds

This photo shows a man buying lottery tickets on May 31, 2022. (Photo: Arnun Chonmahatrakool)
This photo shows a man buying lottery tickets on May 31, 2022. (Photo: Arnun Chonmahatrakool)

Lottery ticket sales in Thailand are a social and economic paradox. While the poor are the biggest buyers, they are also in dire need of savings for their old age. Common sense suggests that poor people should not put their hard-earned money into a game of chance. But there may be a way to bridge this gap and achieve a win-win situation. And not only the poor will benefit from this scheme, but also all lottery buyers.


First, let's examine the current figures in the lottery business.

According to the Centre for Gambling Studies at Chulalongkorn University, the government lottery had an annual turnover of nearly 1.4 trillion baht in 2021. The number of buyers of working age also increased by 7% that year.

The majority of government lottery buyers are in low-income groups, according to the National Statistical Office's figure for 2019.

The lottery is a business that brings in massive revenue for the government -- it earned a net profit of more than 3.36 trillion baht from its lottery sales during 2013-2022. On the downside, lottery purchases hold back low-income earners from saving. Substantial amounts of money that could have remained in their savings accounts are spent on gambling on the lottery.

As the country's population ages, there is a real and serious risk that the poor will struggle in their old age without savings, and the government will face difficulties in resolving this problem.

Many believe that the solution is making people reduce or stop buying lottery tickets and save money instead. Anti-gambling thinking also opposes the introduction of any new gambling formats with bigger jackpots by the government. Another common request is an improvement in the government's control over lottery prices.

These ideas, however, are not feasible. To begin with, it is impossible to decrease the appeal of the state lottery. Additionally, the government believes it cannot afford to lose revenue from this venture.

This is where the Thailand Development Research Institute (TDRI) comes in. Our proposal does not call for a shift in how people buy lottery tickets, and there is no revenue loss for the government.

In fact, lottery buyers get a bonus as a portion of their purchases goes toward their retirement savings.

One political party has proposed a policy to combine lottery purchases with long-term savings called the National Savings Lottery scheme. The money spent on lottery tickets will be invested in the National Savings Fund, and the buyers will get their money back upon reaching retirement age.

However, since people would continue purchasing government lotteries simultaneously, this new lottery scheme may even encourage people to spend more money on lottery tickets. A similar issue of overcharging will also arise with the pension lottery.

Here is the proposal from TDRI that aims to address both overcharging and retirement savings at once.

Part of the difference between fixed retail and the original price of lottery tickets should be used as funds for the lottery buyers' long-term savings.

Let me explain how this works. Currently, lottery tickets cost 80 baht at retail, with sellers already making a profit of 9.60 baht from this price. However, the middlemen and vendors frequently overcharge customers by increasing the ticket price, such as to 105 baht.

According to the TDRI proposal, the government will raise the official retail price by 25 baht to 105 baht. However, the government's and the vendors' profit-sharing arrangements will remain the same as when the tickets cost 80 baht. Vendors will still keep their 9.60 baht profit, and the government will continue to make the same revenue.

Since the ticket price will now be 105 baht instead of 80 baht, the additional 25 baht will be transferred directly to the purchaser's special savings account. This money will be invested and refunded to the purchasers once they reach retirement age or when the investment term is over.

Under this proposal, the government and the lottery vendors maintain their revenues while extra profits made from the current practice of overcharging will now be used as savings for lottery ticket buyers.

With the sale of 100 million lottery tickets twice a month, the new scheme will create at least 5 billion baht of savings per month.

For instance, if you buy four lottery tickets for each draw, you will have a savings of 2,400 baht at the end of the year. Consistently following this pattern for 30 years until retirement, you will have saved approximately 117,000 baht from your 72,000 baht investment, assuming a 3% interest rate and no withdrawals.

This significant sum of additional savings can improve the circumstances of low-income households.

People who buy tickets stand to gain from the TDRI proposal as they can still try their luck while having some of their lottery costs allocated to their savings. Those seeking to maximise their savings would not participate in this lottery programme, ensuring that it does not create new gamblers.

Moreover, it is hoped that the savings benefits offered will persuade underground lottery gamblers to switch to government lotteries instead.

It remains uncertain whether or not the new savings feature will lead to increased lottery ticket purchases. Since ticket prices will still be set at current market prices, it's possible that there will not be a significant change.

To maximise the benefits of this scheme, the sale of "all" lottery tickets should be done online, such as through the government-sponsored "Pao Tang" e-wallet platform. The online sale will ensure that saving money is directly deposited into the buyers' accounts and prevent lottery overcharging.

For those who still prefer face-to-face purchases from vendors, they can scan the QR code on the lottery tickets to save their purchases to their accounts, similar to the digital feature available for government lotteries now.

To safeguard the goal of saving for old age, strict rules must be established regarding the withdrawal of savings prior to retirement age.

Our proposed plan offers a way to promote saving alongside the Thais' love of gambling. While the middlemen may lose the opportunity to overcharge, it is the government's duty to end this practice. The public is likely to support an initiative that stops overcharging, giving the government political leverage when negotiating with these interest groups.

In summary, all lottery buyers will profit from retirement savings, not just the poor lottery players. Because there is less financial strain to help the elderly, the government and taxpayers also benefit. This is precisely what the TDRI savings lottery programme seeks to accomplish.

Chakorn Loetnithat is a researcher at the Thailand Development Research Institute (TDRI). Policy analyses from the TDRI appear in the Bangkok Post on alternate Wednesdays.

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