Place your bets: Local governments pray for a jackpot

July 10th, 2012 by Philip Brasor & Masako Tsubuku

Take my money, please

Japan’s biggest-ever lottery offering went on sale July 9. The 2012 Summer Jumbo Takarakuji  has 26 grand prizes of ¥400 million each — tax free. The last Jumbo lottery was in February, with a top prize of ¥300 million, but in March the authority that oversees the contest increased the maximum possible prize from ¥300 million to eventually reach ¥750 million. The strategy is to gradually increase the amounts of the jackpots in order to boost sales on a continuing basis.

The authority is called the Zenkoku Jichi Takarakuji Jimu Kyogikai, or Zenkokukyo for short. It means, literally, national self-government lottery administration council, and is made up of finance section heads of prefectural governments and large cities. The headquarters are located in the Tokyo Metropolitan Government offices, which makes sense. More lottery tickets are sold in Tokyo than anywhere else.

According to research carried out by the Nihon Keizai Shimbun, ¥173 billion worth of lottery tickets were sold in Tokyo in 2007, meaning per capita sales were ¥14,278. The next largest sales amount was recorded by Osaka, with ¥98 billion. About 46 percent of nationwide revenue becomes prize money, with 40 percent going to prefectural and city governments, and the remainder is used for administrative and other costs. The amount that each local government receives is determined by how many tickets each has sold.

In 2005, Tokyo received the largest portion of lottery revenue earmarked for local governments, about ¥72 billion. That year, the internet research company Dims Drive analyzed local sales and concluded that the less home ownership there was in a particular region, the higher the lottery sales, thus implying that people who are less economically secure are more likely to gamble on the lottery. However, sales are spurred by many factors and, in fact, it’s not entirely clear if the majority of tickets sold in Tokyo are actually bought by Tokyoites. For instance, in 2003 there were six winning jackpot tickets of ¥100 million each in Saga Prefecture alone, and sales of tickets in the prefecture increased by 60 percent during the next Jumbo lottery, mainly because people from all over Kyushu came to Saga to buy them.

Saga’s treasury benefited directly from those winning tickets. That’s why local governments spend money to promote the lottery. (This summer’s national advertising campaign is using super-idol Takuya Kimura.) The point is they want local people to buy their tickets where they live, though lottery fans tend to go quite far afield if they think the chances of winning are better with tickets bought somewhere else. In a sense, the money local governments spend on promotion is also a gamble.

So it’s easy to see why Zankokukyo is so keen on increasing the amount and number of the jackpots. The more money that can be won, the better the chance that a locality will claim a winner and in turn enjoy increased sales. Money from lottery sales is called oishii zaigen (delicious funds), because local governments can use it any way they want. When they receive subsidies directly from the central government, it’s for specific uses that can’t be changed.

However, the jackpot increase has also caused some concern. In 2010 the Ministry of Internal Affairs and Communications assembled a task force to look into Zenkokukyo’s lack of transparency. Sales of lottery tickets now exceed ¥1 trillion a year, but Zenkokukyo is vague about how the money is used after the prizes are distributed. The approximately 14 percent that goes toward administrative costs ends up in the hands of five public corporations headed by former central government employees. No one seems to understand their decision-making process or how they manage the council’s finances. But maybe we shouldn’t be surprised by that. With any gambling venture, everybody knows the house never loses.

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