SVL fell short on record jackpot
Published:Wednesday | August 25, 2010 | 12:00 AM
For the first time in the game's history, Supreme Ventures Limited (SVL) is disclosing that it found itself low on cash from ticket sales to fund a particular jackpot, and was forced to dip into its own accounts to make up the record J$240-million lotto payout in March.
Regulators, however, see this development as a one-off occurrence and say they are comfortable with the gaming company's financial position and its ability to cover prize payouts going forward.
SVL boss Brian George said the company underestimated sales.
Lotto jackpots have ranged above J$100 million in the past, but crested J$200 million for the first time this year.
"Over the past four to five years, we have been fairly accurate in projecting sales based on the advertised jackpot and what we have seen in the past, but sales performance above the $200 million didn't materialise," George told Wednesday Business.
The trice-daily cash-port game also lost much of its shine in the June quarter that followed.
"It's the first time Cash Pot has not shown growth above five per cent; a little surprising but, in part, has to do with the tremendous uncertainties during the whole IMF (International Monetary Fund negotiations) and extradition period," said George.
The Government was at the time negotiating a standby loan facility with the IMF, even as gun-violence broke out in the western sections of Kingston as the security forces attempted to arrest alleged drug and gun kingpin, Christopher 'Dudus' Coke to extradite him to the United States for trial.
"But it's a resilient product that, represents one of the crown games and we will continue to give it the appropriate attention it deserves," George said.
Despite the SVL's falling fortunes, gaming and betting watchdog, the Betting, Gaming and Lotteries Commission (BGLC), said it is in no way concerned about the company's ability to pay prizes.
Fears unnecessary
Supreme Ventures, the BGLC said, has satisfied all the regulatory requirements, which makes such fears unnecessary.
"We have no concern in terms of payout, or capacity to pay as the company is required to maintain a dedicated account, to which the commission has real-time online access," said BGLC managing director, Derek Peart.
The fund maintains a minimum amount due to all prize liabilities, plus the amount to be paid over as levy to BGLC, the Culture, Health, Arts, Sports and Education Fund and the government, said Peart.
"We checked up to Tuesday (August 17) and there was more than sufficient funds," he told Wednesday Business.
SVL tapped its retained profits to cover the shortfall on the J$240 million prize. The ability to meet the obligation, SVL said, was a reflection of the company's financial strength.
SVL reported a marginal one per cent gain in revenue at half year to June 2010, from J$12.3 billion to J$12.46 billion. If the intake from the new super lotto game were excluded, group revenues would have slid 2.8 per cent. One year into the August 2009 launch of that game, SVL is facing another potentially big payout - the jackpot is now at J$439 million - if a winner emerges in Jamaica.
The game is played in about six regional countries, with each partner responsible for funding the jackpot if the winning ticket is bought in their jurisdictions.
SVL, however, has a J$600 million revolver at the Bank of Nova Scotia Jamaica, which it can tap for prize money and attendant tax liabilities. The standby facility expires December 31, 2011.
Profit for the six-month period was down 30 per cent to J$233 million or less than one cent per share (HY 2009: J$334m or 13 cents per share), on the back of anaemic revenue growth, J$156 million higher cost of sales and J$206 million more spent to run the gaming operation.
The depressed activity was mostly in the second quarter where profits plunged 71 per cent to J$66 million, from the June 2009 period's J$231 million, much of which SVL said was costs associated with the start up of its sports betting operation, JustBet.