They said Thursday that they hope to attack this illegal racket by introducing an electronic lottery. The government brought in $350 million though the lottery last year, according to Francisco Ibarra Arana, general manager of the Junta de Protección Social. But in addition to prizes, the government lottery diverts much of its income to social programs.
Those who run the illegal lotteries can be far more flexible because they do not have a social obligation.
Lottery officials were testifying Thursday before the legislature’s Comisión Permanente Especial de Control de Ingreso y Gasto Público.
Most expats are not familiar with the underground lotteries. They generally revolve around concentrations of blue collar workers, such as the Mercado Central and some of the downtown parks. Some are informal extensions of the lotteries in Panamá and Nicaragua and use the same winning numbers. These appeal to expats from those countries.
The Junta de Protección Social has come out with several lottery products to counter the illegal games in the past. There are the tiempos, sort of a daily lottery, and instant, scratch-off tickets.
The Junta has been trying since 2010 to put electronic games into practice. The proposal is to have video outlets all over the country offering smaller instant prizes and also selling tickets for drawings from one to three times a week.
Still the illegal lotteries thrive because they are informal and highly convenient. Most rely on agents who work the streets and even make payoffs to winners.
Finally last May the Contraloría General de la República budget watchdog approved a Junta contract with GTECH Global Services Corp. Ltd. of Providence, Rhode Island. The company is a subsidiary of the Italian Lottomatica Group S.p.A.
The Junta plans are not without opposition. Lottery vendors fear that the electronic machines will take their business. Such vendors frequently work the same corner as did their parents selling tickets for a percentage of the face price. Like all salespeople, they promote the lottery.
The lottery has an inspection service that tracks down the illegal lotteries, but the complaints do not have a high priority in the courts.
Lottery officials said that slightly more than 63 percent of the gross is returned as prizes. The Junta had a public relations disaster last Christmas when it failed to sell the wining tickets in the annual gordo lottery. Instead of holding a new lottery or adding the money to future prizes, the Junta just kept the winnings.
Lottery officials rejected the claim made by some that the government was privatizing the lottery. Instead, they said, the Junta simply was getting technical support from a private firm.
There was no indication when the lottery machines actually will be in service.
The lottery may be facing another obstacle. Executive branch officials have suggested that proceeds from the latter might be subject to income taxes under proposals that might be sent to lawmakers at the end of the year. That would be a decided advantage to the illegal lotteries and the estimated 10 gangs that run them.