THE LOTTO IS A MONEY GAME, EVEN IF IT
Advertising, biased competition, player protection, the role of the regulator, these questions come up again and again, against a backdrop of ambiguity, in recent weeks. And for good reason. The National Lottery is not subject to the 1999 law on games of chance that regulates the sector. It is therefore not considered to be gambling. The reason? Because what the National Lottery offers is a form of "sponsorship" that is very "different" from what private gaming and betting operators do. It would not be a profit-making company as such, but a public support to the civil society in the form of subsidies or sponsoring. And yet, with the National Lottery, the government is the largest provider of gambling in the country. Let's see how it works.
Not a game of chance?
Over the past five years, the National Lottery has posted an average growth rate of 4.5%. In 2021, it achieved a turnover of 1.530 billion euros for 299 million games sold at an average price of 1.5 euros. In addition to a significant increase in sales through digital channels, its strategy is based on small amounts of money wagered in the almost 7,800 points of sale in the country. 50% of the turnover still comes from bookstore sales where Belgians bet small amounts.
"But we are quickly lumped in with games of chance, whereas the fact that it is small amounts, gambling is responsible by nature," said Jannie Haek, the National Lottery's chief executive officer, at a press conference presenting the 2021 results last January.
Sports betting, casino, horse racing, poker, blackjack, for a game to be classified as "gambling", four criteria must be met: the player wagers money, the wager is irreversible, the player can either win or lose and the outcome of the game is based on chance.
Indeed, some games of chance do not rely 100% on chance. A poker player, for example, may gain experience as he or she plays and have "some" control over the outcome. But while skill may play a significant role in this case, the outcome is still partly or entirely dependent on chance. The Lotto is therefore a game of chance in the sense of this definition. In 2021, almost 104 million Belgian winners shared 896 million euros in winnings.
And from a tax point of view?
The tax framework for gambling is privileged, as winnings are not considered income and are therefore tax-exempt. Only a gambling activity carried out on a principal basis, such as professional poker or bridge players, is taxed. In this case, the tax authorities are entitled to consider the winnings as income because of their regular and established nature. Winnings won in the context of a game offered by the National Lottery are tax-exempt. It is therefore a question of games of chance in terms of the tax system.
The Lottery states this on its website: "Have you won a handsome sum in one of our draw or scratch games? Do you have to keep part of your winnings for tax purposes? Well, no! The winnings from our games are all tax-free. No matter which game you play, you will not be taxed on the amount you win. So these are net amounts that you don't have to mention on your tax form."
Sponsoring, but still ...
In 2021, the National Lottery reinvested 335 million euros in Belgian society, firstly as a foundation, but also through 200 million in subsidies paid to 336 cultural, scientific or sports projects. When drawing up its 2022 budget, the federal government decided to increase the monopoly rent that the National Lottery pays it each year, citing an additional effort of 10 million euros.
From 135 million euros, the monopoly rent paid each year by the National Lottery will therefore rise to 145 million euros for this year. The amount of subsidies that it distributes annually to good causes is also increased: from 185 million euros, this envelope increases to 200 million. In total, the Lottery's overall financial return to society now amounts to €345 million (200 + 145) compared to €320 million previously.
It is less visible to society, but private gaming and betting operators also support good causes. Thus, the Ladbrokes Foundation, in association with sports ambassadors who have been selected for their sporting talents and for the human and civic values they convey, is involved in various and varied projects such as Viva for Life, sexism in sport or aid to the most disadvantaged.
Unlike the National Lottery, however, these operators do not claim to "expect the government to react in such a way as to generate these additional millions [...] by guaranteeing the relevant monopoly on games of chance". Double standards? At the very least, this raises questions.
Click here to read the article.