Jun 2010 Financial News

Super Lotto, not so super. Multi-jurisdictional game performing below-par.

Jun 07, 2010

Revenues for all Supreme Ventures Limited's (SVL) games, including Cash Pot, Dollaz and Lotto, increased last year with the exception of its newest offering Super Lotto.

SVL CEO Brian George, speaking at the Group's Annual General Meeting (AGM) on Friday, said the combined mega win game had performed worse than expected.

Games such as Cash Pot, Dollaz! and Lotto, all generated increased revenues in 2009. Cash Pot sales improved by 27 per cent to $19.35 billion over the period.

"The initial performance of the game has fallen far below expectations and urgent action was taken in early 2010 to address the issues highlighted in the post-launch evaluation of the game and to continually review the game's performance," George said.

The multi-jurisdictional game, which has sales in seven countries including Dominican Republic, Jamaica, Barbados and St Maarten, was launched in August 2009 with a starting jackpot of $180 million. However, the game has produced revenues of just $277.09 million up to December 2009.

In contrast, games such as Cash Pot, Dollaz! and Lotto, all generated increased revenues in 2009. Cash Pot Sales improved by 27 per cent to $19.35 billion over the period, Lucky 5 sales increased 13.29 per cent to $626.9 million, Dollaz! game sales increased 18.8 per cent to $324.4 million, while Lotto game sales increased 41.34 per cent to $1.56 billion. The high sales generation was spurred by the winning of a number of jackpots during 2009, including $60 million in January, $50 million in February, August and October, $40 million in November and $90 million in July.

Sales for Pick 3 and WinQuick, the scratch and win game also jumped 72.3 per cent to 2.37 billion and 30.4 per cent to $131 million respectively in 2009.

George said this increase was largely due to the sale of the products at several community festivals. He said the game, being an 'impulse buy' product does well at such events.

Lottery gaming represents 87 per cent of revenue for the Group which comprises subsidiaries Supreme Ventures Financial Services Limited, which provides MoneyGram and Cambio services; and Prime Sports Jamaica Limited, which operates the Acropolis and Coral Cliff gaming lounges. But with increased revenues from games and following a restructuring of the gaming lounges, the Group reported a profit of $751.2 million in 2009 compared to $645.9 million in 2008, a 16 per cent increase in profit year on year. Chairman Paul Hoo noted that despite the overall improvement , SVL is operating in an "increasingly challenging environment".

"Jamaica has always shown itself to be an extremely resilient country and as Chairman of the SVL Board, I am extremely confident that our company will continue to grow and prosper, even under these adverse conditions," said Hoo.

George said the effect of the global impact of the financial crisis was demonstrated in, among other things, the reduction in remittances, loss of jobs and a slow down in tourism, all of which affected consumer spending on the games. He however said a turnaround will be slow in coming, despite the initial growth in the US economy.

"Given the effect of Remittances in Jamaica with what's happening in the US economy anything that is positive that is happening there will always have its benefits here. That may be offset by our tourism product which comes out of the United States. Clearly increasing economic activity will affect positively tourism. The other side of the equation is what has been happening in West Kingston and the negative image of Jamaica. Any gains that we would have got from tourism from the positive economic performance would have been offset by it if not made it worse," George said.

Gaming Lounge revenues increased by 17.7 per cent in 2009, but there may be a shortfall in similar performance in the coming quarter. George said that while SVL saw a recovery in gaming over the last couple of months, this may be stalled by the closure of the facilities and patrons' concerns about staying out late following the unrest.

As part of its regulatory mandate and corporate responsibility, SVL contributed $1.1 billion to the Culture, Health, Arts, Sports and Education (CHASE) Fund, in 2009.

The Board committed to at least two dividend payments to shareholders for the year, Hoo noting that the Board is prepared to "continue a very strong dividend policy, but certainly not at the expense of the viability of the company."


Source:
By Alicia Roache Sunday Finance reporter
roachea@jamaicaobserver.com
Jamaica Observer
Sunday June 06, 2010

http://www.jamaicaobserver.com/business/Super-Lotto--not-so-super_7677558