CHAPTER I 1-11 DESIGN OF THE STUDY... 1 Introduction... 1 Review of literature... 2 Significance of the Study... 7 Objectives of the Study... 7 Hypotheses... 8 Nature of the Study... 8 Scope of the Study... 8 Methodology... 8 Limitations... 9 Scheme of Study... 10
1 CHAPTER I DESIGN OF THE STUDY Introduction Lottery is a form of gambling. Kerala State Lottery was started in the year 1967. The initiative was taken by the then State Finance Minister Sri. P.K. Kunhu. During that period Kerala was suffering from acute unemployment. The number of unemployed youth at the beginning of the third five year plan was above 1.3 million 1. The shift from agriculture to industrial and commercial activities, the craze for white collar jobs, the growth of service sector, insufficient increase in non tax revenue such as interest, dividend and profit, increased public expenditure etc. were the factors that led the finance minister to think of a supplementary source of income for the state. Thus lottery was introduced mainly for reducing unemployment and to a certain extent for supporting the state revenue. Lotteries were conducted by private agencies at that time. Later private lotteries were banned. Today, only the state government conducts lottery. Rules and regulations for conducting lotteries have been framed and lotteries have become a common affair now. At present it gives employment to more than 3 lakh people and contributes, more than Rs. 10 crores a year to 1 Government of Kerala (1997). Kerala State Lottery Thirty Years of Achievement 1967-1997, Kerala State Lotteries Department, Thiruvananthapuram, p.8.
2 the state government by way of profit. Income tax deducted from the prize amount also comes to crores of rupees. Above all, large amount is lying with the state government as undistributed prize. Started as a monthly programme Kerala State lottery is currently having on an average 5 draws a week. The first prize distributed in a draw has increased from Rs. 50000 to Rs. 1 crore and even more. Total sale of tickets has also increased from Rs.75 lakhs to Rs.125 crores a year. Thus it is felt that the lotteries play a significant role in the life of Kerala people. But research scholars, academicians and policy makers have not attempted much on the subject. This research gap motivated the scholar to choose this topic. Research problem can be rigorously identified and conceptualised only after a detailed literature review. Review of literature Nelson 2 (2001) attempted to analyse the working of the state lotteries department by examining the factors influencing the sweepstaker behaviour in buying lottery ticket, examining the extent of employment generated, analyzing the problems faced by wholesalers, retailers and agents in the sector, analyzing the profitability of different types of lotteries offered by the state and suggesting measures for improvement. The major hypotheses of the study were:- a) Wholesalers, retailers, sellers and sweepstaker buyers are satisfied with the performance of the Kerala state lotteries department. 2 Nelson, A (2001). Kerala State Lotteries A Performance Analysis Ph.D. Thesis, Kerala University, Thiruvananthapuram (Unpublished).
3 b) Other than certain attributes of lottery business and personal reasons which are causative to the decision, age, sex, education and income have sufficient influence on the buyer behaviour. c) While problems like inadequate commission, no facility to refund unsold tickets and poor prize schedule are existing as major limiting factors, wholesalers and retailers are contributing towards employment generation. d) Irrespective of the lesser number of tickets sold, high prized tickets fetch high value and record high profitability. By using both primary and secondary data, direct personal interviews with officials and through detailed surveys conducted in different parts of the state the study arrived at the conclusion that the hypotheses were true. This study being the first of its kind in this field were having a number of limitations. A study of the socio- economic impact of the lotteries, conducted by the Institute of Social and Economic Change, Bangalore 3 (1994), found that those from the lower income group both in rural and urban areas participate in the state lottery. Desire to get rich overnight, convenience, low price and easy formalities were the factors that attracted the lower income group. 3 Institute of Social and Economic Change, Bangalore (1994), Socio Economic Impacts of Lotteries, Bangalore, p.56.
4 Lottery buyers- study of consumer profile, a study 4 (1989) conducted in Gujarath also identified lower income group as the biggest buyers of lottery. A study conducted by Lal and Muraleedharan of Indian Institute of Management 5 (1989) also proved that lower and middle income groups constituted most of the buyers of lottery tickets. Non buyers were mainly from the educated class. They were not attracted towards lotteries because of the limited chances of winning. A social survey conducted by the Malayala Manorama 6 (1985) daily on the spending habits of prize winners of lottery stated that 78 per cent of the winners had spend their money for non productive purposes like building houses, purchasing vehicles, charity etc. In an article published in the Mathrubhumi weekly 7 dated 2 nd May 1999, Sri. Rajan Varhese argued that the central government move to ban all kinds of lotteries will seriously affect the economy of Kerala state adversely. Kerala state lottery is different from many other lotteries since it is fully regulated by the state government and the resources mobilised through lottery in used for welfare activities. 4 Narayan Chambers, Ahamadabad (1989) Lottery Buyers Study of Consumer Profile, Ahamedabad, p.33. 5 Lal, R.N. and Muraleedharan, T. (1989). A Study of the Behaviour of Buyers as well as Non-buyers of State Lottery, Indian Institute of Management, Ahamadabad, p.64. 6 Malayala Manorama Daily (Malayalam), (30.12.1985), Survey on the Spending Behaviour of Lottery Prize Winners of Trivandrum. 7 Rajan Varghese, Mathrubhumi Daily (Malayalam), (02-05-1999). The Economics of Lottery.
5 Abdul Latheef Naha, in the Hindu 8 dated 29 th August-2002 pointed out that Kerala state lottery is to be restructured to tide over the present set backs. Based on the opinion of sellers and buyers he suggested restructuring schemes, changing of prize structure, re-establishment of draws in rural places, avoiding delay in prize distribution etc. In Dhanakarayam of 15 th January 2001 9 N. Susmitha (2001) wrote an article on the Way in Search of Luck. In this article she pointed out that there are large number of unauthorized lotteries functioning in Kerala which has reduced the sale of state lottery. Online lottery, lotteries of other states etc are mainly conducted without any proper records or sanction. They exploit the public to a large extent. At the same time sale of such tickets affect Kerala state lottery adversely. In an editorial in the Mathrubhumi dated 5 th June 1998 10, they strongly recommended the banning of other state lottery tickets in Kerala. Kerala state lottery tickets are sold in Kerala alone because their sale is banned by many other states. But lottery tickets of many other states are sold in Kerala without any control. Kerala state lottery is different from that of other states because there is very little control on lotteries by the government in other states where as lottery in Kerala is fully controlled by the government. Banning the sales of other state lottery tickets in Kerala 8 Abdul Latheef Naha (29-08-2002). Lottery Sellers Out of Luck, The Hindu (Daily). 9 Susmitha, N.. (2002) Mathrubhumi Dhanakarayam (Weekly Malayalam), Ways in Search of Luck, p.34. 10 Mathrubhumi (Malayalam ) Daily. Editorial, (05-06-98)
6 will increase the employment opportunities in the state and to a large extent exploitation of the pubic can be restricted. In December 1997 the Kerala state lotteries Department published a booklet named Kerala State Lottery 30 years of achievement 1967-1997 11. In the first article named Employment Opportunities in the Lottery Sector, Mr. Sasidharan Nair argued that in a state where there are more than 30 lakh unemployed, providing employment to nearly 3 lakh of people is not a silly thing, that too without any investment. The employed are mostly persons who cannot otherwise be employed, such as physically challenged and old aged persons. In the second article named Importance of Lottery in our Economy Mrs.Vilasini argued that income from lotteries is mainly used for welfare activities such as education, health etc. In a state like Kerala where resource mobilization is difficult, lottery should be given due importance. Lottery also contributes to the central government by way of income tax. In December 2001 The Kerala State Lotteries Department 12 published another booklet named Ban on Lottery: is it necessary in Kerala? This booklet included opinions of almost all major newspapers and periodicals in Kerala, major political party leaders, social workers, and those engaged in lottery business. All of them pointed out that banning lottery is unnecessary in Kerala because it is a fully government controlled lottery.it 11 Kerala State Lottery Department (1997). Kerala State Lottery 30 Years of Achievement, Thiruvananthapuram, 1967-1997. 12 Kerala State Lotteries Department (1999). Ban of Lottery Is it Necessary in Kerala, Thiruvananthapuram.
7 gives employment to more than 3 lakh people and banning will effect the finance of the state adversely. From the review of literature presented, it is clear that lottery is an unexplored area. Whatever little are available, they are not very serious or rigour pieces of literature. Thus in order to fill this gap, the present study is attempted Significance of the Study Lottery is playing a very significant role in the economy of Kerala State. It provides employment to more than 3 lakh people and an income of nearly one crore a month to the State government. Again more than Rs.5 crore is provided to the government of India by way of income tax annually. The employment opportunities generated by way of printing and transportation of tickets is also significant. The motives for buying tickets, the pattern of utilization of prize money, the peculiarities of employment provided by ticket sales etc. also raise curiosity and deserve attention. Thus the present study was conducted with the following objectives. Objectives of the Study The following are the objectives of the study. (1) To examine the performance of the Kerala State lotteries. (2) To identify the motives for participating in lottery by the public. (3) To examine the extent of employment and income generated through lottery in Kerala.
8 (4) To assess the nature of prize money utilisation by winners. Hypotheses The following are the main hypotheses of the study. 1) Kerala state lottery provides significant employment opportunities to the poor, uneducated and physically challenged persons. 2) Kerala state lottery generates significant income and contributes to the state ex-chequer. 3) There are inter-regional differences in the motives behind participation in lotteries. Nature of the Study Explorative study. Scope of the Study The scope of this study is limited to Kerala state lottery alone, which is unique in its organization and management. The study is mainly concentrated on the income and employment generated by way of lotteries, the motives behind buying of lottery tickets and the utilization of prize money by the winners. The income by sale of tickets and the expenditure made by the Kerala state lotteries department is also studied. Methodology The study is based on both secondary and primary data. Data from the department of Kerala state lotteries collected include profit earned from different lotteries, number of tickets sold, expenditure incurred, unclaimed
9 prizes, number of agents and sellers etc. Detailed data were collected only for 3 years mainly due to non availability of records. A survey among 300 samples were made from the different regions southern central and northern. The districts of Thiruvananthapuram, Thrissur and Kannur were selected at random for the purpose and 100 samples from each district were selected and studied to analyze the motives behind buying tickets and the extent of faith the public has in the Kerala State Lottery. A survey among 90 respondents was made from winners of large prize amounts to analyze the pattern of utilization of prize money. A survey among 150 samples was also made from the sellers of tickets to analyze the income earned by them from this activity. The sample sizes were kept low because of the difficulties in getting the relevant group. The Director of Kerala State Lotteries, a few district lottery officers, a few very large and very small sellers of tickets, the President of Kerala Lottery Agents Association (KLAA) etc. were also contacted and interviewed for their opinions and attitudes about the Kerala State Lottery. Collected data were analysed using appropriate and relevant techniques. Limitations 1) The Directorate of state lotteries, Trivandrum where all accounts and files relating to the Kerala state lottery are kept is having all the limitations of a government office. Lack of staff, improper filing, insufficient account keeping, improper control and lack of responsibility on the part of employees made collection of data from
10 the directorate of lotteries very difficult. Accounts were not update and many information from the district offices are not properly consolidated. 2) Ticket buyers were selected on a random basis for the survey. Buyers were practically absent among the rich and educated class. Collection of information from the uneducated class was difficult. 3) The survey among prize winners regarding the utilization of prize money was also not easy since they were reluctant to pass information fearing tax and other liabilities. Similarly selling agents did not disclose their actual sales. 4) Absence of previous studies and literature on the topic also created problems. Scheme of Study The study is divided into seven chapters. (1) The first chapter presents the objectives of the study, methodology, hypotheses and review of literature. (2) The influence of gambling tendency, game theories and theories of decision making under uncertainties are reviewed in the second chapter. (3) The third chapter gives the structure of Kerala state lottery and its mode of operation.
11 (4) The financial performance of the working of the Kerala state lotteries department for three years from 2001 2004 is analysed in the fourth chapter. (5) The survey results of lottery ticket buyers and its analysis is included in the fifth chapter. (6) Survey results of prize winners and sellers of lottery tickets, opinions, suggestions, complaints and recommendations about Kerala state lottery gathered from the public, agents, sellers, officials of the department and prize winners etc. are included in the sixth chapter. (7) The seventh chapter consists of conclusions, suggestions and recommendations.