Saturday, March 6, 2010

The Road to Hell is Paved with Good Intentions

Taipei Fubon Bank is not making enough money from its sports lottery division. Due to the contract it signed with the federal government a couple of years ago, the bank must pay NT$20.83 billion over the next six years (averaging to NT$3.47 billion each year) to operate the lottery. The total sales from the last two years have been NT$19.1 billion. So despite the fact that it has almost recouped enough money in two years to pay off it's six year contract in total, the bank feels that it is impossible to turn a profit. Last month it asked the government to allow them to cut their payment in half. How is it possible to not turn a profit from a lottery?

What is of most interest to this blog is the bank's main excuse for the predicament it's in. Under the current system, bettors are unable to place single-game bets on the CPBL (to deter match-fixing). This apparently has led to much lower revenues than expected, even though (from what I understand) this set-up has been implemented from the beginning of the lottery.

When it began, the promotion of the new lottery quickly caught the public's eye and interest in gambling increased. However, instead of placing legal bets through Fubon's restricted scheme, punters simply turned to underground bookies for their single game bets. This in turn increased the amount the bookies were taking in, giving them more capital to spend on player bribes. So much for deterring match-fixing.

Basically, an idea that was designed to keep money away from certain criminal elements proved extremely profitable for those same criminal elements.

And totally disastrous to the CPBL.

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