Posts Tagged ‘lottery’

Don’t throw those boring New Years cards away!

Monday, December 16th, 2013

Betting on the horse: Japan Post presents its New Years postcard selection on its home page.

Betting on the horse: Japan Post presents its New Years postcard selection on its home page.

As promised two posts ago, we’re now going to explain the prizes attached to New Years cards. We pointed out in that article that the custom of sending nengajo (New Years greetings) or nenga-hagaki (New Years postcards) has been declining in recent years, a development that concerns JP because it’s always derived a good part of its revenue from the custom. Last year, JP sold 3.27 billion cards, which sounds like a lot, but represents a 20 percent drop since sales peaked in 1999.

Many years ago they started a lottery contest. Each card has a number printed on it, and sometime in the middle of January, JP conducts a drawing for winning numbers. However, the people who buy the cards and send them are not the same people who receive them and thus have the chance to win prizes, so the lottery incentive for buying cards escapes us, unless you assume that the more cards you send the more you are likely to receive, but that sort of cause-and-effect logic wouldn’t actually kick in until the following year, right?

According to NHK, the idea of combining nengajo with a lottery started in 1949, when the price of a postcard was ¥2 yen. In the years right after the war, the exchange of nenga-hagaki took on special meaning, since it was a good way to inform friends and relatives that you were still alive and where you were. The lottery, which is called otoshidama, the term for New Years gifts of cash given to children, made it even more appealing, because so many people had nothing at the time, so the prizes were for the most part practical: sewing machines, skeins of wool, bolts of fabric. As Japanese society became more affluent, the prizes became more aspirational: TV sets and other high-end home appliances, or coupons for international or domestic travel.

In the Jan. 6, 2010 issue of the weekly magazine Bunshun there is an article about the prizes. That year the grand prize was a 32-inch high-definition flat screen TV. The article goes on to explain the keihin hyoji-ho, or “incentive indication law,” which states that a company which offers prizes as an incentive to boost sales cannot offer prizes whose value is more than 20 times the price of the merchandise or service that is sold, so, theoretically, if a postcard costs ¥50, then the most you could win is something worth ¥1,000. But, in fact, JP got a special dispensation, since a different law was passed specifically for nengajo, and that law says you can offer prices worth up to 5,000 times the price of the lottery ticket.

Another condition of the special law is that if the card is received by a company rather than an individual, and that card is a winner, the person who claims the prize must present proof that he or she is an employee of the company. Another condition is that the prizes must be claimed within six months of the drawing (it’s up to one year for conventional Takarakuji lotteries, which are sold as lottery tickets so the incentive law doesn’t apply).

However, there’s another difference between Takarakuji and nengajo lotteries that’s more fundamental to this discussion. Takarakuji publicizes the rate of winning numbers that are claimed, but JP doesn’t. Bunshun interviewed an expert who conjectures that Takarakuji prizes are cash, while JP prizes are goods. If all the cash available for prizes isn’t won in a given year, Takarakuji just keeps the money and adds it to next year’s jackpot, but what can JP do with unclaimed goods? People aren’t going to be interested in last year’s model TV, and the lesser prizes, like travel coupons, usually come with a time period in which they have to be redeemed. Another prize is sheets of stamps, which are deemed legal tender, but for some reason they are destroyed if not won in the lottery.

The impression one gets from the article is that a fair number of nengajo prizes are not claimed every year, mainly because people don’t really care, and one reason they don’t care is that it’s inconvenient. In order to check the numbers, the receiver has to read the right newspaper on the right day or go to the nearest post office, and most people can’t be bothered. Now, of course, JP publicizes the winning numbers on the Internet, but even that may not be enough, so this year instead of prizes, JP is offering cash, thus making it more like otoshidama.

It’s not a lot of cash, though. The top prize is only ¥10,000. The incentive is that the odds are more in the public’s favor. In the past, when the top prize was an expensive appliance, the odds of winning were one in a million. But this year there are 33,936 first prize winning cards, which means the odds of getting one is one in 100,000. There are also 339,365 furusato prizes (“home town” prizes, meaning products associated with specific regions in Japan), so the odds of winning one of those is one in 10,000. And the other prize is, again, sheets of stamps. The odds of winning those is one in fifty.

JP will announce the winning numbers on Jan. 19.

Lottery operators still looking for last year’s winners

Thursday, May 30th, 2013

Where am I? Lottery booths in Tokyo

Where am I? Lottery booths in Tokyo

According to the Mainichi Shimbun, as of May 13, the holders of seven winning ¥100 million lottery tickets that were sold last year for the Dream Jumbo Takarakuji have yet to claim their prizes, and if they don’t claim them by June 17 the tickets will become void. The media is cooperating by actually printing the names of the locations where the seven tickets were purchased in an effort to jog the memories of people who may have bought them but for reasons unknown have forgotten all about it. Being a responsible social medium, we here reprint these locations in the unlikely event that one or more of our readers happens to belong to this select group: The Koriyama branch of Mizuho Bank in Fukushima Prefecture; the TFC Kita Asaka TK Shop in Saitama City; the Nishi Ginza Chance Center and the Yotsuya Dream Center in Tokyo; the Hiratsuka branch of Mizuho Bank and the Yokohama Porta Chance Center in Kanagawa Prefecture; and the Tenmonkan Chance Center in Kagoshima Prefecture. To check the details and the winning numbers (in Japanese only), go here. The site also includes information about unclaimed prizes from more recent lotteries.

This is not, apparently, an unusual development. Since 2009, ¥20.1 billion worth of winning lottery tickets have become void because their holders did not redeem them by the deadline, which is one calendar year after the winning numbers are selected by computer. Included in this loot are 25 tickets that were worth at least ¥100 million. Since Takarakuji lotteries do not carry over, the money becomes the property of whichever local government presides over the place where the winning ticket was sold, so it’s not as if the money becames a complete waste. The free media publicity may have another purpose. Sales of Takarakuji have been dropping steadily for the last few years and the operators want to keep awareness of the lottery alive. In fact, the failure of some lottery buyers to check their tickets for winning numbers could be considered a symptom of the game’s loss of cultural topicality. As with the squirrel that works hard to hoard nuts for the winter and then forgets where it hid them, all the excitement is in the acquisition.

You can’t take it with you: Horse gambler’s system stymied by tax law

Wednesday, December 5th, 2012

People in Japan who win prizes through the lottery (takarakuji) do not have to pay taxes on their gains, even if they win hundreds of millions of yen. However, people who win money betting on horses or other racing sports are required to report those earnings on their income tax returns. Why the distinction? Is it a difference in approach? Though both are forms of gambling, which is strictly circumscribed, lotteries are purely matters of chance, while betting on the ponies can involve calculation and experience. Only the tiniest fraction of the population could make a “living” from the former, by essentially winning a jackpot once, while there is a small but dogged subculture whose members at least like to think they can profit continually at the track.

Poster commemorating Japan Racing Association’s 150th anniversary

One person recently found out just how limited such a livelihood can be. A 39-year-old salaryman, whom the media hasn’t named, was recently indicted in Osaka for tax evasion. The man’s lawyer has told the press that he makes ¥8 million a year at an unspecified job. He is married and has one child with another on the way.

In 2006 he started spending enormous amounts of money on horse racing based on the belief that he could make a profit over time. Using software that “predicts winners,” he would analyze the statistics for individual horses and then bet on multiple contestants in individual races through the internet. He would not bet on races with horses making their debut since there wasn’t enough data available, but almost anything else was acceptable.

The point was to bet as much as possible on as many “favorable” horses as he could, including combination tickets. He lost most races, but he made enough on winning bets to pool that money and then use it for the next series of races. This sort of continuous overkill methodology meant that in the long run his winnings grew exponentially. During the three-year period from 2007 to 2009, he bought ¥2.87 billion worth of tickets and received winnings of ¥3 billion, thus making a net profit of ¥140 million.

However, he didn’t report these earnings on his tax return and eventually was audited by the Osaka branch of the National Tax Bureau. The amount they cited him for was not the ¥140 million he netted, but rather ¥2.9 billion — the ¥3 billion he grossed minus an expenditure of ¥100 million. Thus his tax bill for the three years is a whopping ¥570 million, and with the added penalty it comes to a total of ¥690 million.

Continue reading about tax on revenue from gambling →

Place your bets: Local governments pray for a jackpot

Tuesday, July 10th, 2012

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.

Continue reading about lottery jackpots →

Lottery administrators get their comeuppance (so what?)

Wednesday, May 26th, 2010

And what does Mizuho get out of it?

And what does Mizuho get out of it?

Last week the Government Revitalization Unit, which is holding public hearings on wasteful spending by government-related organs and receiving a lot of positive media attention for it, recommended that certain public corporations related to the lottery (Takarakuji) system be abolished.

The lottery system is run under the auspices of the internal affairs ministry, which permits prefectures and larger cities to sell lottery tickets through “agents,” which in this case is Mizuho Bank. According to ministry figures, sales of lottery tickets in 2008 amounted to about ¥1.42 trillion. About 46 percent of that money, or ¥476 billion, was distributed as prize money; 40 percent (¥418 billion) was distributed to local governments to be used for “public projects”; and about ¥148 billion was used for administrative expenses, including ¥18 billion by the Japan Lottery Association for “promotional activities.”

The watchdog panel found that a lot of the promotional activities carried out by the various public corporations are not only redundant but pointless. “Promotion” essentially means granting money from Takarakuji revenues to needless projects like ugly public statues or free DVDs celebrating a village’s roof-thatching activities and then having the Takarakuji logo imprinted somewhere on accompanying signs or packaging. And, of course, the public corporation retains some sort of administration costs for doing this. Consequently, much of the money earmarked for these “public projects” is siphoned off by the public corporations, through which it passes before going to local governments via multiple routes. Moreover, the heads of these corporations are almost all retired bureaucrats from the internal affairs ministry whose average salary is ¥20 million a year, much more than those of the mayors to whom they deliver the funds. One TV station likened the practice of distributing the money to that of a yakuza boss distributing favors.

Everybody seems happy that these greedy internal affairs “old boys” are getting their comeuppance, but there’s something a little frustrating about the way the watchdog group came down so hard on the lottery system, which is not, after all, paid for with tax money. People buy lottery tickets voluntarily, and though many of those people may be righteously miffed at the way the system is administered, their only real concern is whether or not they win. Nobody buys a lottery ticket because they want to support local governments. If they’re angry, it’s probably because the money that goes into ex-bureaucrats’ pockets could conceivably go toward larger cash prizes — or more cash prizes. The watchdog group is currently looking at public corporations that directly get funds from money-making schemes rather than taxes, but it isn’t within its power to suggest that moneys from lottery sales be specifically earmarked for more useful endeavors, like education (which is what lotteries in other countries usually subsidize) or infrastructure improvements. Its role is to suggest cuts that will reduce the government’s massive amount of red ink, and so far the number of cuts suggested for tax-subsidized bureaucracies has been far below what needs to be done. Making a big deal out of the lottery seems like grandstanding.

Soccer lottery BIG in Japan

Thursday, February 25th, 2010

BIG Lotto

Step right up!

Sports tabloids are all gaga over the latest offering of the soccer lottery known as BIG. Thanks to a record carryover of ¥2.5 billion from last year’s BIG lotteries, top prizes for the next round will be ¥600 million, which, if history is any indication, should result on a huge rush on BIG lottery tickets. In the annals of the game there has been a total of 118 first prize winners, 80 of which won ¥600 million each. In 2007, the first time such a huge jackpot was offered, the system broke down because demand was too high.

It’s also a huge turnaround for the somewhat euphemistically named National Agency for Advancement of Sports and Health, which runs the various soccer-related lotteries under the “toto” banner. When it was launched back in 2001, toto was closer to a betting game than a lottery. Players choose which J.League teams will win in certain sets of games, and a player wins the jackpot (¥200 million maxiumum) if he or she chooses correctly on all the games listed. For whatever reason the system never really took off and lost money in the beginning.

In 2006 the agency started BIG, which removed all the brain work: a computer “guesses” the winners at random. This totally serendipitous version of toto became extremely popular, probably because the odds of actually winning a top prize (1 in 4.8 million) were greater than those for winning the standard Takarakuji lottery (1 in 10 million).

And the odds for this round of BIG are even better — 1 in 2.9 million. Tickets, each of which costs ¥300, started going on sale Feb. 18 and will continue until March 6, which is the first day of the new J.League season. Over the years, some commentators have complained about the soccer lotteries, saying that it sets a bad example, especially for children, to raise money for various national sports endeavors (including the Olympics) through gambling. But, in a way, BIG isn’t gambling; or, at least, it isn’t gambling the way toto is. Whether it’s a waste of money probably depends on if you win.

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