By Gbolahan Gbadamosi

LOTTERY, like other ideas borrowed from other jurisdictions, is a creation of statute. In England, a statute of 1698 provided that lotteries were by default illegal unless specifically authorized by statute. A 1934 Act was further liberalized in 1956 and in 1976 small lotteries were legalized.

Its operation became national in the United Kingdom and the Isle of Man. It was operated by Camelot Group to whom the license was granted in 1994 and 2007. The lottery is regulated by the National Lottery Commission and was established by the then British Prime Minister, John Major, in 1994.

To take a maximum advantage of what lottery should be and how it should be operated, when London won the bid to host the 2012 Summer Olympics, Olympic Lottery Scratch cards were launched on July 27, 2005 under the brand name “Go for Gold”.

National lotteries

Journey across Atlantic Ocean to the United States, history has it that lotteries did not always have a sterling reputation. One early lottery in particular the National Lottery (1965) which was passed by Congress for the beautification of Washington D.C and which was administered by the municipal government was the subject of a major US Supreme Court decision in Cohens V Virgina. See Jean Edward Smith in John Marshall’s Definer of A Nation New York: Henry Holt & Company, 1996 pp. 456-459.

Unlike the UK which has a national lottery system, lotteries are established in 44 states in US.

From the UK and the US, it is clear that lotteries are established by government to either raise funds for a specific project or to augment state revenues or to support educational system. In whichever way, tickets are offered as part of lotteries to enable interested parties participate therein.

Likewise, the National Lotteries Act (NLA) 2005 brought into life “The National Lottery Regulatory Commission” (NLRC) see section 1 as signed into law by the former President Olusegun Obasanjo on March 30 2005.

Section 57 of the NLA defines “lottery or lotteries” to include “any game, scheme, arrangement ,system, plan, promotional competition or device for the distribution of prizes by lot or chance, or as a result of the exercise of skill and chance or based on the outcome of sporting events, or any other game, scheme, arrangement, system, plan, competition or device, which the President may by notice in the Gazette declare to be lottery and which shall be operated according to a license”.

Lottery in ordinary meaning is “a means of raising money by selling numbered tickets and giving prizes to the holders drawn at random”. See the introductory part when Britain raised money to fund 2012 Olympic Games.

In another word, lottery is defined as: “(a) A gambling game or method of raising money, as for a public charitable purpose in which a large number of tickets are sold and a drawing is held for certain prizes; (b)   Any device for distribution of prizes by chance; (c) Any happening or process that is or appears to be determined by chance”.

Are the operators of the Act implementing the provisions of the statute? The immediate answer is in the negative in view of the NLRC’s extension of the provisions to Consumer Sales Promotion (CSP)..

To all intents and purposes, CSP encourages a variety of short term promotional techniques to induce customers to respond in some way. CSP is a typical marketing technique that adds values to a product in order to achieve specific marketing goals. In these categories of CSP are some of the companies that engage in short term promotions which operations are not within the contemplation of the drafters of the National Lottery Act.

It is argued that the Act of the NLRC in issuing letters alleging breach of the provisions of the Act to some companies that engage in short-term promotion is illegal as can be gleaned from section 29 of the Act (Sales of Tickets).

This section requires that
it is mandatory that a ticket of any lottery under the Act shall be sold on behalf of a license through personal applications postage or electronic transmission….” It is my humble submission that companies conducting CSPs do not sell tickets, it is only additional value or incentive for patronizing a particular product, as the consumer is definitely not engaging in a lottery game because he or she gets value for his money in terms of the product he or she has paid for.

Another salient point to consider is located in Section 24 of the Act (Application of proceeds of a National Lottery). Subsection (1) reads “A licensee shall establish an operational fund to be known as the “prize funds” into which is to be paid a minimum return of 50 percent of the proceeds of a National Lottery”, while subsection (3) states that “

Determination of result

A licensee shall pay to the Trust Fund established under section 35 of this Act within a period not more than 90 days after the determination of the result of each lottery, an amount of 20 percent of the proceed of the lottery for the first 5 years of the license, 25 percent in the subsequent 5 years and thereafter 27.5 percent”.

It is to be noted that companies or corporate bodies conducting CSP’s do not sell tickets, there is no proceeds out of which are to pay required percentage to the National Lottery Trust Fund. The Act (NLA), according to the drafters is ONLY to regulate lottery business and not CSP.

Referring to Section 20 of the Act (Duration of a license) which among others states that “ a license granted shall be valid for a minimum period of 10 years and a maximum of 15 years”, it is the contention of this writer that there is no valid reason why a company should apply for a license for a CSP with a minimum duration of 10 years when maximum duration of such CSP is just for a period of six months. Further, it shows that it was not in the spirit and letter of of the Act that companies utilizing one marketing form or the other to push the sales of their products including CSP should be applying for lottery licence.

Pursuant to section 55 of the Act, the National Lottery Regulations 2007 was promulgated. Clause 10(2) of the regulators provides that “Lotteries with short durations, periodic life span, seasonal existence and promotional lotteries of less than 10 years duration shall be operated pursuant to value permit granted by the commission.”

Two acts of illegality come to fore here. Firstly, it altered the provision of the Act by creating another class of lottery not known to the law and secondly, it is against the provision of the Act to confer on the NLRC the power to grant lottery permits. The attempt to expand the scope of coverage of the commission by the instrumentality of the regulation to include granting permit or a licence is not within the contemplation of the Act and therefore it is illegal and invalid. Hence, there is no power to seal up premises in the Act.

Realizing the lacunae in the 2005 Act, the commission is now proposing a parliamentary amendment of the Act that set it up instead of fully executing the mandate reposed in the act. A look at Section 5.7 (1)(b) of the proposed amended Act shows an intention to include in the act as part of the functions of the commission, “Regulate the operation and business of promotional lottery in whatever form and whatever name called in Nigeria”.

This clearly shows that presently, the commission does not possess such powers. This is a ploy to legalize all their illegal acts like writing to corporate bodies for violating Law on Lottery. Several of the new areas being sought by the proposed amendment are already covered by already existing institutions created by law including the CBN Act, National Communications Commission , the National Institute of Marketing of Nigeria, the National Agency for Food and Drug Admnistration and Control(NAFDAC), Consumer Protection Council (CPC), to name a few.

Flowing from the above submissions, the question is, Can something be put on nothing? The answer is a clear No according to Lord Denning (Master of Rolls) in the celebrated case of UAC V Mcfoy when he held that, “If an act is void, then it is in law a nullity. It is not only bad, but incurably bad. There is no need for an order of the court to set it aside. It is automatically null and void without more ado; though it is sometimes convenient to the court declare it to be so. And every proceeding which is founded on it is also bad and incurably bad. You cannot put something on nothing and expect it to stay there. It will collapse”.

It is my humble view that all acts of the National Regulatory Lottery Commission which are not consistent with the law that established it should be reversed. For example, it is unlawful for the commission to compel companies engaging in CSP to pay levies to it as well as closing their business premises. It has no such powers.