The Chief Executive, Lotgrand, operators of the Grandlotto brand, Niyi Adekunle, spoke with Emma Okonji on how the use of advanced technology has enhanced the lottery business in Nigeria. Excerpts:
What do think are the differentiating factors that set apart lotto, sports betting, gambling, and casino?
We used to have pool betting brought in by the Lebanese in 1950s. They started on Lebanon Street in Ibadan at a time when there was no case of recession in Nigeria. The market business leader in lotto started in 2001 in Nigeria. He started with pool business in the early 1960 and now he is into lotto. He is still in business today; he recorded so many landmark achievements in the 1970s. Anytime somebody says that the boom in lottery is attributable to recession, I feel bad. Such information is not only misleading, but also the person saying so does not know enough about lottery. Gambling is the game of loss and win, it is mostly played between two people; the outcome cannot be predicted but highly depends on how you can cheat on one another. Apart from gambling, the others are games.
In gaming, you can make forecasting or prediction. There are rules, which if you know how to use well, will enhance your winning. In lotto, for instance, there is a weekly journal called Lotto Chart, a collection of lotto games played every day of the week. If you study the chart very well it could help you to know the dynamics of how the game works. Sport betting is about football. If Chelsea football club in the English Premiership League is playing at home against a visiting team like Hull City football club, you can easily predict the winner. That is not gambling. That is purely gaming.
Why did Nigeria stayed so long in joining the train of countries where lotto is played?
Nigeria did not join late. Nigeria has always been a lottery playing country. A major street in Ibadan was named after some Lebanese that brought the game into the country in the 1950s. In fact, a current state governor in Nigeria is married to one of the daughters of the Lebanese that brought the game into the country. We have always been a lottery-playing nation. The façade of religion and culture has always played a trick on many of us. We have this “holier than thou” attitude; we want to be seen as knowing Christ more than the people of Jerusalem. This is so bad. It has affected the business of lottery and gaming in Nigeria.
There are diverse perceptions about lotto. Some people believe it should not be played. What do you think?
In Africa, we shy away from the truth most of the times. We look for a veil to cover the truth and call it another name. I was listening to a programme on radio about two weeks ago. The man called himself a business coach; he was on air to say that people play lotto, MMM and other games because of the recession in the country. I laughed and I said this is ignorance personified. Why didn’t he go online first, make his research on what lotto means before he came on radio to misinform the people. He could as well talk to someone in that business before going on air.
For a long time, I have not heard that the United Kingdom is experiencing recession. In London, with a population of 7.7 million people, there are 52 companies running lottery business and sports betting. In 2012, the London Olympic Games was solely financed by revenue from lottery. Playing lottery is now a big thing worldwide. It has taken on a new and different dimension in Asia, China, Hong Kong and Singapore. These countries are churning out volumes in revenue more than what the United Kingdom is currently doing. Countries are now looking in that direction. China is not in recession. In the history of human kind, no economy has grown as fast like that of China’s. It is unfortunate that here in Nigeria our people will rather give lottery and gaming a bad name just to be seen as a moral vanguard.
What are the dynamics behind the game of lottery business in Nigeria?
That is a good question. I always like to talk about lottery in Nigeria. A major company, which is into lottery business in Nigeria, hired the service of a Yoruba musician turned pastor, who did a popular radio jingle for that company. The pastor asked his listeners to play lottery and assured them that they will get their winnings. That is a good thing. We are going in the right direction, but also in new direction to widen the revenue base of the country. I have travelled wide. My experience is that even in countries that are easily labeled with one particular religion or the other, lottery is a serious business there. In Morocco or Dubai, people play lottery.
In the United Kingdom, where christianity is the main religion, lottery shops abound. If a respected gospel artiste performs radio jingle to promote lotto, I think it is a good development for the industry to sensitise people on what lottery is and what it is not. I want to emphasise that people are making money and more people are coming on board, which signifies that lottery has come to stay in Nigeria.
How expensive is the business of lottery in terms of technology investment?
The question is relative because what is expensive to me may not be expensive to you. But to start, you need deep financial base to start a good and well run lottery company in Nigeria today. You have to obtain an operating license from the Nigerian Lottery Commission. Each state has its own lottery board and you have to get a state license after you must have obtained the federal license. Each state has its own price. Lagos State still charges N200 million, while the Federal Government’s license goes for N100 million. In Ogun State, it is still about N100 million. To get started, you will spend about N500 million on licensing alone.
The cheapest software for lotto is not less than $200,000. If you require one thousand terminals at a cost of about $300 per unit, that comes up to $300,000. That is aside other things; so it is that expensive. Sad enough, you can’t go to any bank in Nigeria to get support. You will have to sign some agreements with foreign partners that do not understand the workings of the naira because naira is now so devalued in recent time. Imagine you have a projection to realize a certain profit monthly and based on that you have signed an agreement to remit $10,000 monthly. It becomes more difficult to achieve if the naira falls as it would these times, and the target profit may become so useless that the business owner will have to travel to his/her foreign partner and renegotiate the terms. This is very difficult because the partners would not believe you and may never trust you going forward and that would naturally endanger the life your business.
Are there examples to buttress your point?
There was a particular agreement we signed when the naira was N165 to a dollar for equipment from China. We booked some thousands of equipment upfront. Within seven months, the naira rose to N310 to a dollar. We thought we would get the official rate of N197 per dollar. That was not to be. Pressure from foreign partners became so intense and we had to cut our loss and moved on then the naira was N345 per dollar. We ended up spending close to N40 million to get the equipment instead of N12 million we had projected. That is why government should get involve in lottery by making policies that will be favourable to operators.
How effective are the policies governing lotto business in Nigeria?
It is quite unfortunate that the people that make policies concerning lotto do not have any idea as to what the business is about. They have refused to invite people who have the knowledge of this business to assist them. Honestly, we need government’s policy that will be vibrant and helpful. States and the federal government should collaborate to have common ground regarding policy formulation. They should have common license issuing agent and licenses should be issued at a business friendly rate.
The idea of just giving out figures to represent the cost of lottery license is abysmal. It does not happen anywhere in the world except in Nigeria. We know how governments overseas handle such business, and how operators regard the policies of lotto business. Right now, there is an imbroglio over policy that has to do with management of lottery business between Lagos State and the Federal Government. The case is still in court. The ego trip is there and it is affecting business. We need sincere and serious policies to put lottery business in the right perspective in Nigeria.
What opportunities abound in lotto business?
The job opportunities in lottery are limitless. The technology aspect of lottery business offers more jobs than many other technology support based enterprises because it is a whole wide space. To put one terminal together is a whole lot of work, which requires competent hands. The terminal you commissioned today can stay for two years in the sun, but it will go out of service one day and you will need to fix and at some point require a new one for replacement. That is more jobs created. The thermal paper we use in a day is more than 30,000 pieces industry wide. These are imported commodities. All the terminals are imported. Government should leverage on the licensing area. People earn commission every day. Government can put in place uniform licensing in the country and have sharing formula with the state where lottery businesses operate. If you use all the money to pay for licensing and can’t get good equipment, it is as good as nothing. We have many companies that have closed down today because they can’t function because of all these bottlenecks
Can lottery take Nigeria out of recession?
Recession is a combination of many factors; it is as a result of many economic variables that are underperforming at a particular time. Lottery is just one single entity. Lottery alone cannot take the country out of recession, but if it is well managed it can contribute greatly to the general economy to the extent that it will be very difficult to fall into recession next time. In Croatia, more than 29 per cent of the budget is funded by revenue from lottery. For about four years now, lottery has been the major source of fund generation that runs the country. Lottery generates big revenue in Croatia. In Asia, the country earns billions of dollars from lottery. So it is all about planning and putting in place good policies.
Technology is a major factor that drives business and national growth. How can lotto leverage on innovation and advancement of technology?
Technology has really helped the business of lotto. There was a time when it took us hours to get one cycle of game; we have four cycles in Grandlotto per day. We have companies that have seven cycles per day. Before the advent of technology, there was no way you could do more than one cycle, at most, two cycles: one in the morning and night. The one you do at night, you will roll it till the next morning because we operated manually. Our staff would have to validate winning tickets; our office would be packed with ad hoc staff who came for validations. You need to supervise the staff. Otherwise, you are exposed to danger. Technology has saved us from all these.
With technology, I can be in London and monitor business in Nigeria. Now, we use the support of telecom sites, GPRS and SIMS. I can deploy a terminal here in Lagos and it would work in Maiduguri. With GPRS in place and data, we can transmit anywhere. The job now has been so liberalised and very attractive simply because of the advancement in technology. Now the case of fraud has reduced.
How will you rate Lotgrand in terms of bonus payment among the top five lottery businesses in Nigeria?
I would have left this question to be answered by a player. The fact is that we are the best. We manage our payment so well that we don’t have any hiccup. We are called for empowerment schemes for people because of what we have done. The fact is that the backbone of this business is payment of winnings. When you check the architecture of the payment itself, at least, 60 per cent of what you received as revenue goes out as winning payment. At Grandlotto, 61.5 per cent is what we paid out as winning in 2016. The business is structured in a way that we have principal agents, agents and sub agents, and we pay them commission of between 25 –30 per cent. Add that together, it is about 91.5 per cent paid out to our partners scattered across the world. Finally, what comes to us, as a company is meagre.
The business of lottery is now prominent in Nigeria. Will you say it has economic value on the players?
Nigerians are wonderful people. If a Nigerian comes to knock at your door daily it is because he is getting a particular value from you. If people are patronising you in the business of lotto, it means that they are getting real value from it. This is my submission.