Three government lotteries introduced this year
have become Taiwan's latest craze. The games'
stated purpose is promoting public welfare, but
the spotlight has instead been focused mainly
on the huge jackpots being offered.
Officially, Taiwan's nickname--the ROC--is short for the Republic of China. But according to a joke making the rounds lately, the acronym might more appropriately stand for "the Republic of Casino." It is not that Taiwan has many casinos (they are, in fact, still illegal), but that its people have long demonstrated a passion for gambling at any opportunity. Since their introduction in January this year, the three varieties of what are known as the Public Interest Lotteries have become the focus of that obsession. TaipeiBank, commissioned by the Ministry of Finance (MOF), has been operating a twice-weekly computerized lotto, a scratch-off game conducted twenty times a year, and a traditional lottery to be run six times this year on special occasions such as the Chinese New Year and the Moon Festival.
Opinions on the social merit of the activities differ sharply. Representing one point of view is Richard Yang, general manager of TaipeiBank's Lottery Department, who sees lottery games as enjoyable and harmless entertainment for adults. "They're games of opportunity where winning is totally by chance, quite different from types of gambling where skill plays a role," he says. "There's nothing wrong with people spending a little money on a hope and to have fun." Among those taking an opposing stance is Yang Shou-jung, professor of sociology and dean of the School of Arts and Social Sciences at Taipei's Soochow University. "It's gambling whatever you call it, and it's worse when the government is running it," he says. "Gambling is still a crime according to the Criminal Code, so the message here is that what's a crime to the general public is perfectly all right if committed by the government."
Nevertheless, Yang Shou-jung concedes that of the various forms of gambling, lotteries tend to have the least negative social impact because the cost of playing is so low. Of course, the odds of winning are also very slim. For Taiwan's new online lotto, that chance is about 3 percent, with more than 90 percent of the winners getting the lowest prize--NT$200 (US$5.71)--for having three matching numbers. The odds of hitting the jackpot by choosing all six winning numbers (from a range of one to forty-two) is smaller than one in 5.2 million--which some observers have calculated to be less than the likelihood of being struck by lightning during one's lifetime.
"Lotteries are permitted in countries where gambling is illegal, because rational people understand that the chance of winning is close to nil, and they therefore won't devote too much time or money to it," says Yang Shou-jung. "Only extremely irrational people or those with mental problems actually believe they can 'control' the numbers and consequently put in everything they have. Unfortunately, it seems we have more such people in Taiwan than in most other places."
In their first month, the three lotteries achieved sales of NT$14.6 billion (US$417 million), 20 percent above the issuer's original projection. Of the total, NT$4.1 billion (US$117 million) was for the scratch-off lottery, NT$200 million (US$5.71 million) for the traditional type, and NT$10.3 billion (US$294 million) for the most popular game, the online version. The computerized lotto was so hot that in its first month the consumption of paper used to print out lotto tickets rivaled the quantity consumed by the United States over a six-month period. Retailers complained that paper supply could not keep pace with demand, forcing them to suspend business at times.
A major reason for the craze is certainly the big jackpot. In the several traditional or scratch-off lotteries that the government had conducted in the past, the highest prize was NT$20 million (US$571,430). But in each of the first several rounds of the online lotto, the grand prize was about ten times that much. "To many people, winning NT$20 million would no doubt improve their quality of life," says Richard Yang. "But hitting the jackpot in the online lotto would change their life altogether."
To help grand-prize winners deal with this dramatic development in their lives, TaipeiBank is making available financial management and psychological consultants, though so far none of the winners has chosen to take advantage of those services. According to Richard Yang, the winners just seem to want to claim the money and depart as quickly and quietly as possible. "Psychiatrists have told us that about 70 percent of people have no problem handling drastic changes in their lives, whether positive or negative," he says. "Maybe none of the remaining 30 percent has become a grand-prize winner yet."
The psychological impact seems more intense for the losers. An unemployed man in Taoyuan County in northern Taiwan, for example, committed suicide after losing his last savings to the online lotto. "I'm so poor, why couldn't God let me win?" were his last words, his doctor told the press. The tragedy, however, has not appeared to disturb the lotto dreams of other players. Which numbers to pick is a common topic of daily conversation throughout Taiwan. At least one major newspaper is running a special four-page section of advice on the subject twice a week, numerous manuals and computer programs offering special techniques have hit the market, and many players seek the intervention of the gods--sometimes going through "spiritualists" or other "divine powers"--for guidance on which numbers will come up. People wait patiently in long lines at the 3,000-some ticket stations--expected to increase to 8,000 by the end of the year--and some will even travel to a distant town to place their bet at a station identified by a "divine power" as the source of the next grand-prize ticket.
Restaurants, department stores, and even hospitals report that their business has gone down on lotto nights. Ironically, the one "trade" not being adversely affected may be the illegal lottery system that uses the government lotto's winning numbers to take side bets. Stalls in some wet markets, for example, discreetly offer gambling based on the official lotto's "special number." The dealer rakes off a mere 10 percent of the total take as overhead and the rest is paid out to winners. Richard Yang says that illegal lotteries most likely will never disappear because of the higher percentage of pay-out and the ease of hiding winnings from the tax collector.
In mid February, Vice President Annette Lu publicly criticized the lottery as a "social mudslide" that encourages sloth and superstition, though she later added that she did not necessarily mean that the lottery should be stopped. "The vice president's warning was no doubt inspired by good intentions, but the holding of lotteries is a government policy that has gone through the legislative process," says Richard Yang. "The lotteries could be discontinued at any time if we receive such a government order, but expressions of opinion are not the same as a formal change of policy."
The vice president's remarks did not sit well with the lottery ticket vendors either. Chen Kun-tsai, chairman of the Association for Promoting the Benefits of Disabled Lottery Retailers, called Lu's comments "irresponsible." "Every coin has two sides and I don't deny that lotteries can have some negative impact," says Chen, who runs a ticket station in Taichung City together with several handicapped friends. "But it's not proper for a high-ranking political figure to cite only the negative side and ignore the positive contributions such as creating job opportunities for the disabled and generating revenue for social welfare activities." Chen urges players to exercise self-restraint, never betting more than they can afford. The largest amount ever spent at his station at one time was NT$20,000 (US$571), he says, but most players restrict themselves to no more than the cost of lunch.
In all the publicity about the lottery in the mass media, the social benefits alluded to by Chen Kun-tsai have received relatively scant attention, even though they were supposed to be the primary rationale for setting up the new lottery system. Of the two major benefits, the first is the creation of work opportunities for people who are less competitive in the job market. As stipulated in the Guidelines for the Issuance of the Public Interest Lottery, which regulates all aspects of the business from ticket sales through the distribution of earnings, the retailers of traditional and scratch-off lotteries must be disabled, members of aboriginal tribes, or low -income single parents. People in these categories also receive higher priority when applying to be online lotto vendors. According to MOF statistics, the lotteries so far have provided employment for about 16,000 members of the three groups. As vendors, they earn commission of 10 percent of the ticket prices for the instant and traditional lotteries, and 8 percent for the online lotto.
The second form of social benefit is through distribution of proceeds to social welfare programs and charitable activities. After deducting 60 percent of the total revenue for the pay-out and 13.25 percent for overhead and commission, the remaining 26.75 percent is earmarked for this purpose. Of that amount, 5 percent goes to the National Health Insurance program, 45 percent is put in reserve for the national pension plan currently under planning, and the rest is distributed to local governments according to a formula that takes into account both population and amount of lottery sales. A committee made up of officials from the central and local governments is responsible for supervising and reviewing the distribution of lottery revenue. "The social welfare function is the positive side of lotteries and can neutralize the negative impact," Yang Shou-jung says. "It is the government's responsibility to make sure that this function is fulfilled."
Yang is relatively unworried about the money going into the health insurance and pension programs, though he suggests that more might be distributed to the health insurance program, since it is currently facing financial difficulties, and less to the pension program that is still under preparation. But he lacks confidence that the money allocated to the local governments will be used solely for charitable and social welfare purposes as prescribed. Yang notes that the supervising committee is composed mainly of officials specializing in finance, accounting, and economics rather than social welfare experts, and no counterpart committees exist at the local government level. "Because of financial pressures, local governments usually give relatively low priority to social welfare -related programs," he says. "Without a supervising unit formed by social welfare experts at the local level, there is no guarantee that the money will actually be spent for the intended purposes."
So far, proposals for reform of the system have concentrated mainly on reducing the frequency of the twice-weekly lotto in order to reduce the temperature of the public fervor--or at least moving one of the draws from Friday to Saturday, when it would have less influence on productivity in offices and on factory floors. Perhaps a future article on this subject will need to be headlined "Saturday Night Fever."
Bucking the Odds
Previous attempts to conduct government-run lotteries in Taiwan all foundered, mainly due to criticism about the social impact. The first attempt, the Liberty Lottery operated by the Taiwan Provincial Government, was begun in 1950, soon after the government of the Republic of China arrived on Taiwan, to help raise funds for infrastructure development. At the start, the grand prize was NT$200,000--then worth US$5,000 or enough to buy a commercial building in the busiest part of downtown Taipei. Later the jackpot was increased to NT$500,000 and finally NT$1 million. The Liberty Lottery was discontinued in 1987 out of government frustration with the rapid growth of "Tachiale" or "Everybody's Happy," an underground gambling scheme that used the lottery's winning numbers for illegal side bets. Illicit betting activity continued, however, based on numbers from Hong Kong's Mark Six Lottery.
In 1990, TaipeiBank, then known as the City Bank of Taipei, inaugurated a two-in-one (scratch-off and traditional) lottery to help ease the financial difficulties being faced by the Taipei City Government. Although the public response was enthusiastic, the Executive Yuan, concerned that the program might have a negative effect on the government's image, ordered the termination of the lottery after three drawings. In mid-1999, the Kaohsiung City Government came out with its own scratch-off lottery, but that was also discontinued by order of the Executive Yuan--this time after only one drawing--in opposition to cities operating lotteries at a time when the central government was studying the implementation of its own system.
Later that year, the Bank of Taiwan introduced the National Welfare Lottery, another two-in-one game held monthly, designed to raise reconstruction funds following the devastating September 21 earthquake. The lottery was very popular when it first hit the market. But to increase the grand-prize jackpot, the quantity of smaller prizes was reduced after the third drawing, cutting the proportion of winners from 40 percent to 20 percent. After twenty-four drawings, business became so light that the bank decided to call it off.
Though the designers of the new Public Interest Lotteries are optimistic that the program will be able to continue for the long term, the history of lotteries in Taiwan is a reminder that with games of chance, nothing should be taken for granted.