The economic implications of the privitization of the Maltese national lottery

Abstract

More than 200 state lotteries are in operation world wide. Just four of these - the UK, Greece, Malta and South Africa - are privately owned and operated. The majority are operated by government departments or agencies. But increasingly, as the success of online games has become more apparent, the operation of lottery systems and associated management functions has been contracted out to the private sector. The scope of the dissertation is to evaluate the initial economic impact assessment of privatizing the National Lottery and the social cost and benefit of gambling. The result to privatize the National Maltese Lottery has delivered significant economic and political benefits to the Maltese state, shareholders of Maltco [INTRALOT S.A. (GR), Players Group (M) and ASL (M)], and the Maltese lottery industry. Even though the short run overall revenue contributed to the state decreased by considerable amounts, in the future it should be enlarged. In the long-run, the country should not only gain greater revenue to Government but also acquire an improved infrastructure and know-how in the gambling industry. Thus, privatization would lead to greater efficiency to the Maltese gaming industry, and hence there could be more control on illegal gambling. Most researchers recognize that legalized gambling may have good economic impacts. These may comprise increased employment, higher average wages, capital inflow, increased tax revenue, and more choice for consumers. However, the "social cost" of gambling remains debatable, there effectively being little agreement either on how to define a cost or on how to measure it.