Lotto's number is up if S44 fails to work

Lotto's number is up if S44 fails to work

New lottery chief Maj-Gen Aphiratch Khongsomphong: Even a two-star general armed with Section 44 has no guarantee of victory over the
New lottery chief Maj-Gen Aphiratch Khongsomphong: Even a two-star general armed with Section 44 has no guarantee of victory over the "Five Tigers" who control the lottery cartel.

In an extreme move, the National Council for Peace and Order (NCPO) has invoked Section 44 of the interim charter — rule by diktat — as a weapon against overpriced lottery tickets.

The NCPO has also appointed a major-general as the new chairman of the board of the Government Lottery Office (GLO). His appointment will lead to direct military oversight and potential prison sentences for those who sell tickets at more than face value.

If successful, the approximately 17 million people aged 18 and over who spend about 6% of their income on the national lottery will benefit from the 33% reduction in price.

Nevertheless, the College of Local Administration at Khon Kaen University, which has assessed the root cause of the problem, is wary of a scenario in which the currently ill-designed and outmoded lottery products will continue to enable middle men to prey on lottery customers.

The problem of overpriced lottery tickets stems from the early 20th century. Thai bureaucrats began printing lottery tickets to sell for the main purpose of earning revenue to fund government activities. Today, nearly a century later, this same mode of production is still in place. Each set of lottery tickets is printed from 000001 to 999999.

The GLO's strategy to reduce the price is to increase the quantity of tickets per drawing from 36 million to 37 million. Our analysis indicates this will have a negligible effect. Out of the total number of tickets made available, at least 700,000 tickets, such as 000001, have a close to zero probability of being sold since they are considered unlikely to be drawn and thus have no commercial value.

Although most consumers of the lottery are not statisticians, they have a clear sense of which tickets they desire. In short, tickets with three or more numbers that are the same are left untouched. The total cost of these unsold tickets is close to 2 billion baht per annum. This cost is indirectly passed on to the buyers and is partially accountable for the high price of tickets. And, even though the probability of any number being drawn is identical, people still buy the ticket numbers they think will win.

Moreover, seeing the opportunity for making a fortune out of tickets with better perceived chances of winning, the five major lottery operators — which, in practice, form a syndicate — offer to buy all the tickets, including unattractive numbers, from the individuals and the government agencies that have the lottery quota allotment from the GLO.

Once in the hands of these operators, the lottery numbers are grouped in sets of the same numbers before being distributed to markets, mostly through vendors from Loei province. In effect, this is a monopoly which allows the suppliers to regulate ticket prices. Furthermore, it is at the heart of the problem of overpriced lottery tickets that has plagued Thailand for decades.

On March 25, Thai newspaper Post Today said the prime minister "with complete awareness of the problem" will not renew the quota of the major lottery operators, alias "the Five Tigers". Based on the opinions of lottery players, we believe that with the economic power the Five Tigers have amassed and the knowledge of the system they have mastered, even with de facto martial law, it will not be difficult for them to use their proxies or nominees to buy their way back into the business. Therefore, this monopoly of government lottery tickets will continue and perpetuate the overpriced tickets.

Online lottery tickets have been widely discussed as an effective way to lower the price of government lottery tickets. But because of lobbying by interest groups, which include the underground two- and three-digit lottery operators, there are no strong public supporters of the online lottery. In these circumstances, the chances of Thailand having an online lottery are remote.

One proposed option, changing the method of printing the lottery tickets to eliminate those deemed undesirable, would make the remaining tickets more attractive. In theory, the small operators and the government agencies that have the quota will then no longer be dependent on the five major operators to absorb the financial loss of unsold tickets. However, some tickets will always be more favoured than others.

Crucially, the GLO must erase all doubt that there is a conspiracy in how the numbers are drawn. Based on data from the last 15 years, tickets with the same last two numbers are drawn more frequently (16%) than the statistical probability (10%). Thus lottery tickets with the last two digits having the same numbers are perceived to have a higher probability of winning and are selling at 120 baht each. When sold in sets, the price tag of these tickets can go even higher.

From our survey, many consumers have noticed that the chances of the same two-digit numbers coming from two consecutive draws is more frequent than according to the law of probability. The implications of this are disturbing. It is more than likely that Thai citizens' belief systems are being manipulated.

In a normative system where consumers can choose the numbers, which we recommend, it must be possible for there to be multiple winners sharing a jackpot. Should there be no first prize winner in a draw due to the restriction of numbers printed, the GLO merely adds the prize money to the next draw. At the same time, this would not only be attractive to the players, it would be more legitimate for the GLO.

Finally, finding a solution must be a priority if the public, as well as international partners, are to trust Thailand's ability to address worsening crises in human trafficking, fishing and aviation. That a form of martial law had to be invoked on a purely domestic bureaucratic issue, such as the lottery, is understandable but has grave implications in the fight to stave off accusations of Thailand becoming a failed state.

Peerasit Kamnuansilpa, Phd, is founder and former dean of the College of Local Administration, Khon Kaen University. 

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