A joint venture between Turkish Demirören Holding's Şans and Italy's Sisal has inked a deal for the operating rights to Turkey's national lottery, Milli Piyago, for the next 10 years, Turkey's Sovereign Wealth Fund (SWF) said yesterday.

The deal comes after a bidding process was completed earlier this month, and the Turkish-Italian venture had presented the best bid.

The joint venture, in which Demirören holds a 51% stake via its Şans Digital subsidiary and Sisal holds 49%, put forward a proposal that will see it guarantee a minimum annual contribution to state coffers of TL 9.32 billion in 2020, up from TL 3.4 billion in 2018, according to the contract.

The joint venture will also be obliged to increase proceeds each year at the rates specified in the contract.

With the new model, the national lottery's turnover will triple in the first year alone, while costs will decrease. The Sisal-Şans joint venture will run operations at a commission rate of 9.5%, including dealer commissions. In the new model, the number of dealers will rise to 10,000 in the first two years, and their revenues will increase as well. The operation, which the Sisal-Şans joint venture will take over within nine months at the latest, according to the contract, covers Milli Piyango, Hemen Kazan and Sayısal games.

NOT PRIVATIZATION,

BUT REVENUE SHARING

The national lottery license was transferred to SWF for 49 years in 2017. It was concluded that receiving services through a revenue-sharing model, instead of privatizing the national lottery, would provide the highest benefit to the public.

With this model, the national lottery license will remain with the SWF and the model will be reevaluated at the end of the 10-year contract period.

Since February, meetings have been held with leading operators from the U.S., the Czech Republic, China, the U.K., Italy, Lebanon, Malaysia and Greece, in addition to companies that have been operating in the sector in Turkey.

In the bid process that started on June 22 and ended on Aug. 9, a total of 11 bids were received from the Sisal-Şans joint venture, Doğan-Intralot joint venture, SAZKA Group and IGT Austria GmbH.

In the evaluation process, the net present value, minimum proceeds commitment and the minimum commission rate that the operator will receive over these proceeds, as well as the experience of the participants in games of chance and financial and technical qualification criteria were taken into consideration. Among the technical requirements was that the foreign partner have a minimum 49% share, a minimum consolidated gaming turnover of $1 billion and operating at least 1,000 terminals.

The bid process was aimed at providing maximum benefit to the public based on the criteria of high proceeds and low commission. The net present value that will remain to the public from the 10-year proceeds committed by Sisal-Şans Joint Venture is set to be at least around TL 28.12 billion. The lowest bid in the process was placed at a net present value of TL 18.1 billion. As a result, the competitive bidding process brought an additional TL 10 billion to the public.

Elaborating on the issue, SWF General Manager Zafer Sönmez highlighted the high importance of the national lottery for Turkey. "When we took office in September 2018, we decided that the wealth that would bring benefits to the public in the fastest way was the national lottery license, attaching priority to our efforts in this direction. We are implementing a model that will bring our games of chance up to world standards while reducing costs and increasing turnover. I hope that the process that we have successfully completed in line with our mission of adding value to Turkey will be good for our country and our nation," Sönmez said.