Turkey’s privatization revenues near $10 billion after lottery sale

ISTANBUL - Anadolu Agency

A Turkish consortium of two experienced gaming companies has emerged triumphant from a fierce competition to earn the 10-year operational rights of Turkey’s national lottery.

Turkey’s income from privatizations since the beginning of the year has exceeded expectations, approaching $10 billion with the recent privatization of a 10-year national lottery license that dazzled market by bringing in $2.76 billion for the state.

The most recent Privatization Administration figures show that total amount of completed privatizations in the first half of 2014 exceeded $1.6 billion and the amount is expected to quadruple with the addition of money expected to be collected from the sale a number of approved power plants, as well as with the privatization of the national lottery on July 15. The gaming unit of Turkish tourism company Net Holding and experienced gaming company Hitay won the privatization tender with a joint bid to operate the country’s national lottery for 10 years, offering $2.76 billion for the rights.

Energy tenders worth $5.4 billion are currently awaiting approval, including the sale of the Kemerköy, Yeniköy and Tatğan thermal power plants.

Approval of the national lottery and power plants tenders will therefore raise Turkey’s privatization revenue for the year to $9.7 billion. The government’s privatization target for the whole of 2014 was 6.6 billion liras. When value-added tax (VAT) is included, the revenue from the national lottery privatization rises to $3.35 billion, or 6.89 billion lira at current foreign exchange rates. This means that the lottery sale alone meets the government’s 2014 target. The Turkish economy has raked in more than $58.3 billion from privatized assets since the ruling Justice and Development Party (AKP) came to power in 2002.

Lucrative lottery sale

Turkey finally succeeded in privatizing the National Lottery on July 15 after almost eight years of failed attempts to privatize the lottery.

The government still has to approve the bid, which was significantly higher than the $1.62 billion reserve price.

“We will make [it] a very successful business with our partner Hitay investment,” Orlando Kalumenos, Net Holding’s Chief Financial Officer said. “We will provide a better service by using technology, particularly the internet and mobile devices.”

Experts have claimed the lottery could increase revenues through introducing modern technology and promotion techniques. Currently, the lottery´s numbered ticket draw, its main product, is mostly sold by freelance ticket sellers on high streets.

People in Turkey have developed an itch for lottery scratch-cards and tickets, spending more than 10.6 billion Turkish Liras ($5 billion) over five years on them, the country’s National Lottery has reported, one day after the long-awaited privatization of 10-year operational rights of the games.

Annual reports released yesterday show that interest in scratch-cards and lottery tickets drove sales to a record 2.44 billion liras in 2013. Scratch-cards accounted for almost 10 percent of sales.

Last year, around 1.5 billion liras was spent on games where players select their own numbers, known as the “sayısal loto,” a lower figure than during the previous four years.

From 2009 to 2013, 53 percent of total lottery revenue was paid to the government and other bodies, amounting to 4.5 billion liras, while winning lottery players were paid 4.6 billion liras.