Government, private lotto operators go to war

Last week, Ghana’s private lottery industry literally declared war on the Government of Ghana in what has the potential to be an ugly imbroglio since effectively, both sides have also declared the will be fighting with their gloves off. While the impending show down has escaped the primary radar of corporate Ghana, since the lotto industry is mostly an informal sector activity, albeit regulated by government which is also the biggest participant, the stakes and implications for the Ghanaian economy are huge.

A week ago the Ghana Lotto Operators Association (GLOA) gave President Nana Akufo Addo a two week ultimatum to take action against the ongoing actions of the National Lottery Authority to rescind the operating licenses of all but four of its members or face yet undeclared consequences. Among other things GLOA is demanding that the NLA’s recently appointed acting Managing Director, Ernest Morte be removed, that urgent measures be taken to recover the GH¢20 Million Cedis owed to NLA by KGL – a private company licensed by the Authority to run an online lottery platform on its behalf – to resuscitate NLA, and that the President stop his appointees from interfering with the licenses of the private sector operators in order to avoid the risk of huge judgment debts being imposed on the state.

This is not an idle threat – a week earlier a group of private lotto operators, grouped together as the Concerned Lotto Agents Association of Ghana (CLAAG) publicly called for the establishment of an independent regulatory institution for the lotto industry in Ghana pointing out that the National Lottery Authority’s dual role as the biggest operator and the regulator of the industry amounts to severe conflict of interest which is inimical to the development of the industry and indeed is threatening the livelihoods of some two million lotto agents nationwide as the NLA takes steps to eliminate the competition offered by private lotto operators.

The tenuous relationship between NLA and its private competitors – whom it regulates as well as competes against – has taken a turn for the worse in recent weeks with a series of events set off by NLA’s revocation of the operating license of Alpha Lotto Limited culminating in a statement from the Authority claiming that its investigations have revealed that only four private lotto companies have genuine agreements with it that allow them to operate.

CLAAG’s spokesman, Kwaku Duah Tawiah, taking an openly political stance, told journalists at a press conference that “anytime the New Patriotic Party comes to power their target is to make sure private lotto is abolished and that is why NLA has all the time tried to push private operators out of business.”

While both sides of the imbroglio have repeatedly presented their respective positions, one clear pending outcome if the issue is not resolved quickly is that it will contribute heavily to Ghana’s already inordinate unemployment rate, a situation which is persuading even the industry analysts that are leaning toward the NLA and government itself which is backing it (indeed CAAG is openly asserting that it is government itself that has set the agenda for NLA to execute) to recommend that a compromise is arrived at by both counterparties.

Here the issue of efficiency versus labour’s interest – which is emerging across many different industries in the country’s economy – has become central. The NLA, using a fintech has developed digital lotto platforms as a more efficient way of conducting its business and the private lotto operators lack the capacity to keep up. However they correctly point out that a huge proportion of the most avid traditional lotto market cannot keep up too and so efforts to replace the conventional platforms with digital platforms is effectively depriving them – particularly the elderly and uneducated – of the ability to participate in lotto staking.

The dispute has quickly deteriorated into outright acrimony with CLAAG clearly outraged by what they perceive to be malfeasance by government working through the NLA.

An official statement released by the association a fortnight ago asserted that : “competition in any democratic dispensation builds a healthy economy and its about time that the NLA accepts that monopoly is a thing of the past.”

Worryingly CLAAG has pulled off the gloves openly accusing the NPP of having a malfeasant agenda towards the private lotto industry since 2001 when it first came to power. It has also singled out the newly appointed acting Director General of the NLA, Ernest Mote, for criticism in his personal capacity, warning that his conduct “if not checked will escalate matters in the industry.”

If this position was initially seen as the antics of a disgruntled group within the private lotto industry, driven in part by politics – effectively serving the political opposition by identifying the NPP as the industry’s opponent – last week’s public declaration by the all- industry embracing GLOA has confirmed that their sentiments are shared by the entire industry, political stance inclusive.

GLOA is also calling on the President to as matter of urgency commence an investigation into KGL’s Lotto activities which it alleges is part of an attempt orchestrated, by certain unidentified political appointees of the incumbent government to collapse National Lottery Authority (NLA) to allow KGL to take it over and create a new monopoly over online lottery in Ghana.

Addressing a press conference in Accra on Tuesday, April 6, Dr Ato Condauh, Barrister-at-Law, Solicitor -Superior Court, Ghana said the alleged conspiracy is being executed by the Acting Director-General of NLA, Ernest Mote, and some appointees from the Akufo Addo government for their selfish gain.

Dr Ato Conduah stated that, if this orchestrated act not stops and investigate immediately it will collapse the 30 years impasse between private lotto operators and NLA leading to over 2 million families unemployment.

According to him, KGL has no track record of running any lottery operations anywhere in the world, but through greed, blackmail and chicanery by appointees at the Presidency, KGL has a license to operate online lotto on behalf of NLA and is  now being touted as a partner to restructure the operations of NLA, whereas KGL is indeed indebted to NLA GLOA asserts that this transition from a licensed operator to a strategic partner reveals one the biggest conflict of interest cases in recent times.

“How can a licensed, but the indebted operator of NLA, become a financier to bail out NLA? The real truth about this farce is that KGL still indebted to NLA in excess of GH¢20 Million Cedis for the year 2020. How can a debtor-licensee owing a State Authority such as NLA, neglect its debt and be pretending to be bailing out NLA?” queries a statement from the Association.

“This is a fluke orchestrated to fool Ghanaians and create the excuse to hand over NLA to KGL. NLA’s financial challenges are a direct result of KGL using its online platform to sell NLA 5/90 numbers, to deny the NLA lotto marketing companies the needed revenue, which otherwise would have come from NLA kiosks manned by the Lotto Marketing Companies (LMCs). If KGL had paid its 2020 debt of GH¢20 Million Cedis to NLA, that would have helped NLA to pay outstanding winnings, and its numerous indebtedness to media companies in Ghana”, the statement asserted

Dr Ato Conduah further stated that the restructuring of NLA in the 2021 budget and  uninformed schemes by the Acting Director-General of NLA, Ernest Mote are all part of efforts to surrender NLA to KGL, “by using information already in the public domain, to psychologically manipulate Ghanaians to buy into the deception to hive off NLA to KGL without the public noticing.”

Speaking on the NLA attacks on Alpha Lotto, Dr Conduah said this is a clear attempt to prevent competition, and create a monopoly for KGL, the special purpose vehicle (SPV) to capture the lottery sector.

“From the initial lies peddled against Alpha Lotto of not having a license to not licensed to operate online lotto to not permitted to operate its own lotto, to not being authorized to use USSD Short Code, and finally to the suspension of licenses and applications for review of existing licenses, are all subtle schemes to create an exclusive online lotto for KGL” Conduah alleges.

Curiously, NLA now claims that only four private lotto firms have valid licenses from the NLA even though the others, whose licenses are being declared invalid because they are not backed by board approval, all paid GHc1 million each to the Authority, supported by GHc5 million bank guarantees.

However NLA has replied to these accusations in no uncertain terms, simply denying every single accusation made against it. For instance it says it is not owed GHc20 million by KGL. Here it is on solid ground, even if only because GLOA may have got its figures wrong; GLOA executives, facing up to NLA’s official response to GLOA’s accusations  point out that the Authority has effectively not denied KGL’s indebtedness, only the amount involved. However even if there is indeed an amount owed, and GLOA got it wrong, this casts doubts on the veracity of all the other accusations made by the Association against the Authority.

But far more worrying is the implacable stance being taken by NLA which leaves no room for any degree of compromise.

Says its own press statement released a day after GLOA’s public statement and ultimatum:

“The resolution of a 30-year-old impasse between Private Lotto Operators and NLA is at the brink of collapse due to reckless and irresponsible conduct of some members of Ghana Lotto Operators Association (GLOA) and its allied group known as Concerned Lotto Agents Association of Ghana (CLAAG).

“The National Lottery Authority (NLA) would like to state categorically that, there is no policy for KGL Technology Limited to take over from NLA. The Minister of Finance, Hon. Ken Ofori-Atta, also confirmed this during his vetting at the Appointments Committee of Parliament.

“It is instructive to place on record that NLA is not creating any form of monopoly for KGL Technology Limited. We, therefore, want to urge the media and the general public to totally disregard the frivolous allegations by GLOA.   “For the avoidance of doubt, Keed Ghana Limited is not the same as KGL Technology Limited in terms of operations.

“Keed Ghana Limited is duly licensed by the NLA to operate a dividend-based game on behalf of NLA known as Lucky 3 with an official short code of *987#.   “On the other hand, KGL Technology Limited is an online lotto marketing company duly licensed by the NLA to operate the 5/90 Original Lotto on behalf of the Authority with the official short of *959#.

“The allegations by GLOA against KGL Technology Limited, Keed Ghana Limited and Mr. Alex Dadey are all lies, frivolous and baseless.

“KGL Technology Limited is fully legal and fully recognized by the NLA as our online lotto marketing company responsible for the operation of *959# on behalf of NLA.   “The partnership between NLA and KGL Technology Limited could be best described as a GAME CHANGER, and the partnership is a million times profitable to NLA unlike the licenses issued to members of Ghana Lotto Operators Association including Alpha Lotto Limited.

“For the avoidance of doubt, KGL Technology Limited is NOT indebted to NLA by GHC20 million and therefore, it important for the media and the general public to totally ignore and wholly reject the frivolous, lies and unsubstantiated allegations by GLOA against KGL Technology Limited. “Again out of ignorance, GLOA sought to create misleading information that there is a KGL Cabal with intentions of creating a monopoly over online Lotto for KGL Technology Limited to the disadvantage of the State and other Lotto Operators.   “KGL Technology Limited is a wholly-owned Ghanaian company with no political attachments.

“KGL Technology Limited has a track record and perfect platform which has been very useful to the revenue mobilization efforts of NLA.

“Therefore, the attempts by GLOA to link KGL Technology Limited to Government appointees are quite unfortunate and it needs to be totally ignored by the media and the general public.

“There are no hidden intentions, and absolutely no “take-over” schemes to surrender NLA to KGL Technology Limited.

“GLOA members are just behaving ignorantly, and perhaps the lawyers of GLOA are advising them wrongly.

“KGL Technology Limited is only an online Lotto marketing company duly licensed by NLA and operates on behalf of NLA aimed at supporting the revenue generational capacity of the Authority and nothing more or less.

“The NLA stands by every statement that has been issued by the Public Relations Unit against the illegal activities of Alpha Lotto Limited.    “Alpha Lotto Limited illegally was operating a Short Code as well as illegally conducting live Draws on GTV.

“The National Lottery Authority(NLA) has every power to curtail the illegal short code, and illegal Live Draws of Alpha Lotto Limited.

“The National Lottery Authority(NLA) would not hesitate to revoke the licenses of Private Lotto Operators which are not operating within the terms and conditions of their respective licenses.

“The National Lottery Authority (NLA) as the regulator would also not allow any private lotto operator to operate short code without the appropriate license from the Board of NLA.

“The National Lottery Authority(NLA) as the regulator would not allow any private lotto company to conduct independent live draws on TV without a Draw Committee duly constituted by NLA in accordance with the National Lotto Act 722 and Lottery Regulations, 2008(L.I. 1948).

“The NLA would like to state categorically that, the licenses issued by Hon. Kofi Osei-Ameyaw, the former Director-General to all Private Lotto Operators were WITHOUT BOARD APPROVAL.

“Therefore, in accordance with the National Lotto Act 722 and Lottery Regulations 2008(L.I.1948), the licenses issued by the former Director-General, Hon. Kofi Osei-Ameyaw to the Private Lotto Operators are NOT GROUNDED IN LAW because it is ONLY the BOARD of NLA that has the powers and authority to grant licenses to companies or individuals who want to operate Lotto in Ghana.   “President Akufo-Addo is fully committed to protecting the National Lottery Authority (NLA) from collapsing.   “And setting the records straight once again, KGL Technology Limited is not indebted to NLA by GHC20 million.

“The only recalcitrant group here is the members of GLOA/CLAAG, and the NLA would like to caution members of GLOA that they cannot fight NLA, the regulator through the media or Court and become successful.    “NLA shall never allow the illegal activities of some GLOA and CLAAG members to collapse NLA.

“KGL Technology Limited and Keed Ghana Limited have their respective licenses DULY APPROVED by the BOARD of NLA in accordance with the National Lotto Act 722 and Lottery Regulations, 2008(L. I. 1948).

“All the licenses for members of GLOA/CLAAG signed by the former Director-General, Hon. Kofi Osei-Ameyaw were WITHOUT BOARD APPROVAL.   “All the allegations by GLOA, CLAAG and their “ALLIES” against the Presidency, Government Appointees, Alex Dadey, Razak Kojo Opoku and Ernest Mote are all frivolous, lies and baseless. We are therefore urging the media and general public to totally and wholly disregard those amateurish allegations and treat them with a pinch of salt.

“So far so good, the NLA is very happy with the KGL Partnership and absolutely no media noise from GLOA, CLAAG and their “ALLIES” would stop the partnership between NLA and KGL Technology Limited because the partnership is a GAME CHANGER and more profitable to NLA.”

Interestingly both sides are using the media rather than the law courts to present their respective cases, at great cost. CLAAG says it would only turn to the courts as a last resort; however, this may also be in part because of the lack of proper legislation on which it can stand, which indeed is why it is calling for proper laws and a proper independent regulator. Similarly, while GLOA claims that legal action is one of its options it admits that it wishes to avoid taking it and warns that it had other options and the fact that it declines to reveal them is ominous.          This is making neutral observers to question the veracity of both sides stance suspecting that the media may turn out to be the real winner in this convoluted imbroglio.