Wednesday, May 27, 2009


Newsagents bid to buy NSW Lotteries

Alex Mitchell writes in Crikey 27.5.09:

Newsagencies in NSW have been complaining loudly about the forthcoming privatization of NSW Lotteries because of the impact on their revenue streams and the value of their businesses.
So they’ve decided to put in a bid themselves.

On Friday the Newsagents’ Association of NSW and ACT Ltd has a meeting with Treasurer Eric Roozendaal, former general secretary of the NSW Labor Party, who is leading the privatization push.

Under the bank-backed newsagents’ proposal, the government would retain a majority 51 per cent shareholding and the association the other 49 per cent.

With a section of the Labor Caucus, the unions and the party-at-large up in arms over the sell-off of the lotteries, Parklea prison and other state-owned assets, Roozendaal may see electoral merit in a partial sale.

On the other hand, as a rabid privateer he is more likely to go with one of the players from the Big End of Town.

The front-runner to win the lotteries jackpot is the Victorian Tattersalls group which has already taken over Queensland’s Golden Casket.

Tattersalls has an inside run because it has strategically placed urgers in and around the NSW Government who are doing their best to dismiss the rival bidders -- Tabcorp, which owns Sydney’s Star City Casino at Pyrmont, and G-Tech, a subsidiary of the world's biggest lottery firm, Lottomatica.

For newsagents, the outcome of the auction is critical. Lottery ticket sales are a nice little earner at their 1200 online outlets and they also bring customers into newsagencies acting as a drawcard for selling other items off the shelves.

NSW newsagents argue there is no guarantee that they will continue to have exclusive retail rights if one of the big private operators buys the lotteries licence and there is a genuine fear that the percentage they receive from Lotto and Scratchies sales will eventually be reduced.

The big gaming enterprises are also seeking support from Roozendaal for an agreement to allow the sale of lottery products to be broadened to include registered clubs, supermarkets and service stations.

The club industry, one of the major donors to the NSW ALP, already sells Lotto and Scratchie products at the giant Twin Towns RSL Club at Tweed Heads and the neighbouring Banora Point RSL Club, both owned by the heavy-hitting Twin Towns empire.

Under Roozendaal’s timetable, the sale of the 30-year exclusive licence will be completed by the end of the year and the sale price will be reflected in the 2010-11 budget i.e. election year.

The government is hoping to raise more than half a billion dollars for the lottery concession which, ironically, was started by Premier Jack Lang at the start of the Great Depression in 1931 to fund public hospitals.

When the government first investigated the sale of NSW Lotteries a few years ago the market price was more than $900 million, but the worldwide credit and lending crisis, and its impact on the tinhorn Australian economy, has put paid to that sort of return. The new owner is purchasing a gold-plated bargain.