The Sunday Times FT - Rapido online lotteries wind up on huge losses

Online Lotteries Pvt Ltd, a wholly owned subsidiary of the National Lotteries Board (NDB), has made a thumping loss of 556 million rupees since its incorporation two and half years ago and last week decided to wind up the operation. NDB said it had taken steps to terminate all operations of the online lotteries Daily Rapido and Quick Rapido as a result of the heavy losses.

The company was formed under an agreement between Norsk Tipping AS, the Lotteries Board of Norway and the NLB of Sri Lanka during the tenure of the former UNP regime. Under the agreement the Norwegian counterpart was responsible for all the management and technical functions ranging from marketing, data centre operations, administration, communications and all related hardware and software for five years.

According to the NDB’s Chief Financial Officer Harsha Bandara, the company has been incurring heavy expenditure in terms of fixed overhead other operational expenses. “The company could collect only Rs 300,000 per month as revenue but they incur about Rs 2 million per month as fixed overhead alone. The operational expenses were too high. The loss for the eight months the company was in operation this year alone is Rs 125 million. It is clear that it is not a viable company” said Bandara. General Manager of the NLB M. S. Karunaratene said that NLB is looking at the possibility of the company and the Rapido lottery being run as a department of the Lotteries Board. “We can run it as one of our sections, we will then not incur such high overheads. We can definitely reduce the expenses,” said Karunaratene.

Bandara said the NLB has invested Rs 700 million in the company and to this date the company has not been able to recover any of its capital. Further the sales of the company have been very low compared to the sales of the other lotteries of the board.

There were other issues that have contributed to the crisis situation of the company.

According to Bandara, the gaming levy of Rs 50 million per year that has been imposed by the government and the issues the company had with the clearance of some of the software and system equipment at the customs has all contributed to the collapse of the company.

The equipment that was held up as Customs has claimed that the equipment is gambling equipment which was needed to repair the terminals when the system experiences break downs. The delays in customs clearance have hampered the operations as the system was unable to ‘connect’ with the agents (overseas) and this also contributed to the loss, said Bandara.

Bandara also said that the online lotteries were not popular in the market. “This kind of lottery scheme is suitable for the developed countries. In this country what the people are used to is the traditional lotteries; they are not used to operating the terminals or systems,” he said.