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THAILAND LOTTERY NEWS - 2000
Lottery Office to Contest Ruling
BANGKOK, Thailand (December 13, 2000) --The Government Lottery
Office will contest an arbitration ruling awarding damages of
2.5 billion baht to Jaco Co for losses incurred due to cancellation
of the online lottery programme. Somchainuk Engtrakul, permanent
secretary at the Finance Ministry, said the lottery office board
disagreed with the arbitrator's ruling based on the belief that
the concession was invalid from the beginning. The awarding
of the project, he said, failed to comply with guidelines set
out under a 1992 law governing private sector contracts with
the state. Directors of the Government Lottery Office met yesterday
to consider their response to the arbitrator's ruling, which
was announced last week. Jaco, a joint venture between Loxley
and US-based Gtech, was awarded an eight-year concession to
run an online lottery scheme in 1996. Implementation of the
project was delayed by both the Chavalit and Chuan governments,
and was ultimately scrapped earlier this year by the cabinet
due to alleged contract irregularities and strong protests by
existing lottery sellers, many of them disabled people. Mr Somchainuk
said that while the burden of complying with the 1992 public-private
law rested with the state, this did not vacate the responsibility
of the private contractor in ensuring that all proper procedures
were followed.
The case is now likely to head to the courts.
SOURCE: Compiled by LI staff from local media reports.
Lottery Office Not at Fault for Breaching
Contract, Politicians to Blame
BANGKOK, Thailand (December 13, 2000) -- The Government Lottery
Office has been ordered by the Arbitration Office to pay Jaco
Co 2.5 billion baht in damages for breaching their contract.
Jaco, a joint venture between Loxley Co and GTech, had been
commissioned by the state to dispense lottery tickets through
a network of on-line vending machines. The first reaction from
the lottery office director was that he would not pay. He said
the damages award was too high and he would try to talk to the
company about reducing the payment to 850 million baht in the
form of a free lottery quota over a given period. If the company
refuses, the lottery office would take the case to court, but
only as a last resort. Somjainuek Engtrakul, the permanent secretary
for finance and the civil servant ultimately in charge of the
lottery office, was more adamant. He said he would contest the
damages ruling in court. The matter could drag on for several
more years yet before an incontestable decision is reached if
that is the intention, but at least one thing is quite clear
to both sides-the contract was violated and not by Jaco Co.
But nor is the lottery office at fault for this breach of a
binding document. The contract was signed by the two parties
four years ago, on the very last day of the term of office of
the government headed by Banharn Silpa-archa. The deal had the
full blessing of Praphat Pothasuthon, then deputy minister for
finance. But then Mr Praphat's successor, Chaturon Chaisaeng,
deputy minister in the Gen Chavalit Yongchaiyudh government,
suspended the project on the basis of suspected irregularities.
Mr Chaturon's successor, Pichet Phanvichartkul, the serving
deputy finance minister, went further and scrapped the project
altogether in response to protests against the on-line service
by blind lottery vendors and dealers.
The lottery office was merely carrying out the orders of its
political masters, in particular deputy ministers Praphat and
Pichet. If anyone is to be held accountable for this huge potential
loss to the state it is these two men. They should be made to
clear up the mess they have left behind them.
The on-line lottery project was introduced in the hope of bringing
to an end the long-standing problem of overpriced lottery tickets.
Lottery players could be happy in the knowledge that, at last
after all these years, they would be paying the price for tickets
intended by the state. But the project did not receive the support
it deserved. There were too many questions surrounding the transaction
of the deal-signed on that last day of the Banharn government.
And a study conducted later by the Thailand Development Research
Institute concluded that vending machines could not solve the
problem of overcharging without there being sufficient tickets
to meet demand. The scrapping of the deal by Mr Pichet appears
to have been political expediency, to head off a protest by
blind lottery vendors, some of whom were threatening a hunger
strike. The decision was made in full knowledge of the possible
legal consequences. As things stand, neither Mr Pichet nor Mr
Praphat are expected to accept responsibility for their actions,
which leaves the lottery office alone to deal with Jaco Co and
the hefty damages bill. The money will have to come from somewhere
and you can safely bet it will be the average consumer through
higher lottery ticket prices.
SOURCE: Compiled by LI staff from local media reports.
Arbitrator Rules Lottery Office Must
Pay Damages for Lost Contract
BANGKOK, Thailand (December 8, 2000) -- An arbitrator has ruled
that the Government Lottery Office (GLO) must pay 2.5 billion
baht in penalties to Jaco Co for its failure to implement an
online lottery sales contract signed in 1996.
Jaco, a joint venture between Loxley and US-based GTech, was
awarded an eight-year concession to run an online lottery scheme
on the final day of the Banharn government. Both the Chavalit
and Chuan governments suspended the project over alleged irregularities.
Ultimately, the project was scrapped following strong protests
by lottery sellers. The Government Lottery Office had proposed
paying damages of 900 million baht, which arbitrators turned
down in favour of Jaco's claims in an announcement made late
on Wednesday. Chaiwat Pasokpuckdee, director-general of the
Government Lottery Office, said the decision would be considered
by the office board. If negotiations with Jaco to reduce the
fine fail, the lottery office would have to take the arbitrator's
ruling to the courts. Jaco reserves the right to file suit for
damages for up to one year following the ruling by arbitrators.
Mr Chaiwat said the damages claim filed by Jaco exceeded actual
losses incurred from the failure to implement the contract.
Included in the claims, for instance, were legal fees charged
despite the fact that advisers were full-time staff of Loxley.
Mr Chaiwat said starting from the beginning of the contract
in June 1997 actual losses incurred from lost lottery sales
were calculated by the GLO at 900 million baht. Negotiations
between Jaco and the GLO have been ongoing. The lottery office
has proposed offering Jaco the right to distribute two million
lottery tickets per drawing for eight years, or three million
tickets for five years, which it says is equivalent to around
900 million baht for the firm.
Jaco, in turn, has asked for the right to distribute six million
tickets for 10 years, equivalent to around 1.2 billion baht.
SOURCE: Bangkok Post.
Government Lottery Office Offers Gtech
Joint Venture Company Out-of-Court Deal Lottery Facing B13bn
Damage Bill
BANGKOK, Thailand (November 23, 2000) -- The Bangkok Post reported
yesterday that the Government Lottery Office has offered to
grant an eight-year lottery sales concession to "Jaco Co
Ltd," a joint venture between Loxley Plc and U.S. based
Gtech. The offer is an attempt to settle a dispute arising from
the breach of the online lottery contract by the state. Under
the offer, the office would sell six million tickets a fortnight
throughout the period to Jaco at 36.40 baht each, against the
face value of 40 baht. Jaco could then make a gross profit of
3.60 baht a ticket or 540 million baht a year if all tickets
are sold. It could also grant sub-contracts to its agents. The
original contract between the two parties called for the office
to pay 13 billion baht in damages to Jaco if the terms were
violated. The company is considering the offer, waiting first
for an arbitrator's ruling next Tuesday. Chaiwat Pasokpuckdee,
director-general of the office, said the state agency realised
that it would certainly lose the case and wanted to achieve
an out-of-court settlement. "A court case will take a long
time and benefit no one, so we came up with the offer. I think
our offer is the best solution," he said. However, Jaco
had earlier demanded a 10-year concession. On Dec 3, 1996, the
last day of the Banharn Silpa-archa government, the office awarded
Jaco a 1.6-billion-baht contract to run online lotteries. The
contract was signed by the then deputy finance minister, Prapat
Photasuthon. But Chaturon Chaisaeng, the deputy finance minister
of the succeeding Chavalit Yongchaiyudh government, suspended
the project, as he believed there were irregularities behind
the deal. When the Chuan Leekpai government took over in late
1997, the company pressured the government to honour the contract.
At first, Deputy Finance Minister Pichet Phanvichartkul had
agreed to ratify it, but the government dropped the idea after
facing strong opposition from the public. Eventually, Mr Pichet
decided to scrap the contract, prompting Jaco to file a case
with an arbitrator. Although Mr Pichet and permanent secretary
Somchainuk Engtrakul prefer to see the case going to the court,
Mr Chaiwat said he did not think that would benefit the office.
Mr Somchainuk wants the case to go to court because the Council
of State had ruled earlier that the project was in violation
of the public-private joint venture law, which meant it was
void in the first place. The act requires scrutiny of all such
ventures valued at more than one billion baht. Mr Pichet would
prefer a court ruling to avoid political repercussions. He had
been accused earlier of taking bribes from Jaco for his stand,
which some viewed as favouring the company.
SOURCE: Compiled by LI staff from local media reports.
Grand Jury Indicts 12 for Alleged Illegal
Thai Lottery
ST. PAUL (July 8, 2000) -- A federal grand jury has indicted
12 people from Minneapolis and St. Paul for allegedly running
a Thai lottery. More than $180, 000 in cash, 28 guns, silver,
gold, precious stones and jewelry were found during searches,
police said. The lottery allegedly operated for about a year
beginning in early 1998. Many of the larger gambling locations
were in federally subsidized public housing units. The National
Lottery of Thailand is sponsored by the Thai government and
is only legal there. The illegal lottery in the Twin Cities
used the last two and last three numbers of the National Thai
lottery' s grand-prize winning number for its winning numbers.
A bet on the winning two-digit number usually paid $60 for every
$1 bet; $600 for every $1 on a three-digit bet. The FBI Asian
Organized Crime Task Force is seeking community assistance with
additional information concerning organized crime or criminal
enterprises that victimize the Asian community. Information
can be given anonymously by calling the FBI at 612-376-3492.
SOURCE: Compiled by LI staff from local media reports.
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