Rs 100 to Rs 1 crore is the kind of stuff dreams are made of. Or, Kerala state government lotteries.
Earlier this month, 22-year-old Mohijul Rahima Sheikh, a migrant worker from West Bengal, became a millionaire four days after he had landed in Kerala with Rs 100 in his pocket.
However, Kerala’s state-run lotteries rest on many such Sheikhs. In God’s own country, this is one industry the sun never sets on. Since the state launched its own lotteries in 1967 under a CPI(M) government — the first state in the country to do so — they have never made a loss.
The lotteries, apart from liquor, are also the one confirmed source of finance in a state with strapped resources. In the five-year tenure of the outgoing Oommen Chandy government, proceeds from lottery tickets rose 10 times, from Rs 557 crore to Rs 5,696 crore. The CM, who often talks of the state lotteries in glowing terms, said at a press conference last week that the government intended to nearly double the revenue to Rs 10,000 crore. Chandy is in-charge of the Tax Department that covers lotteries in the state.
Whoever gets elected in the polls next month, this is one revenue model that no one is likely to touch. On May 31, 2015, Kerala’s public debt stood at an overwhelming Rs 1,35,114.95 crore.
It is a common sight to see people chasing a lottery agent to buy tickets in the state. Hawkers roam around on tricycles selling tickets. In Kerala cities and villages, speakers blare out urging people “Not to miss”, “Last day (to buy tickets) — tomorrow, tomorrow, tomorrow”, “Win-win everyone”, “Tomorrow is your day”, “All you need is to buy one (ticket)”, “Chance of a lifetime” — all ending with that magic promise: “Rs 1 crore”.
However, the business model really doesn’t depend on jackpot winners such as Sheikh. It keeps going on the fact that lottery customers purchase at least a ticket every day, to win some day, in the belief that “somebody has to win”. The prize money, ranging from Rs 5,000 to the bumper Rs 10 crore, keeps them coming back, in the hope of bagging the next big one.
The Kerala government’s lottery wing has offices in all the 14 district capitals, besides regional offices. There are close to 40,000 authorised agents, around 1.4 lakh retail sellers apart from many more unregistered hawkers, and approximately 70 lakh tickets in circulation on a daily basis under half-a-dozen brand names.
Palakkad and Thrissur districts top the list of lottery sales while Kollam and Thiruvananthapuram have the maximum number of customers.
Till mid-2000s, when they were banned, the state also had online lotteries and lotteries of other states.
There are few clear answers on why Kerala is so fascinated with lotteries. “They are imagining a source of redemption,” remarks Paul Zacharia, the well-known Malayalam fiction writer and essayist. He compares the state’s love for lotteries with a Malayali’s admiration for Mata Amritanandamayi or Sri Sri Ravi Shankar. “Lottery is something that makes people dream, and exploits the poorest of the poor. In Kerala, everyone, including political parties, have let them down, and they submit themselves to supernatural powers such as godmen or lotteries, searching luck,” he says.
Another reason that winning cash holds such a sway over the average Keralite, says Zacharia, is that while most have managed to fulfill their basic requirements, not many have easy money. And here is a product that comes certified by the government itself.
K Venu, a Communist thinker and prominent Naxal leader from the 1970s, who is now a writer and columnist, believes the primary reason for Kerala’s addiction to lotteries is its reluctance for physical labour. A majority of native residents prefer white-collar jobs even if these are underpaid, he points out. “Out of some one crore working people in the state, except the 15 to 20 lakh government employees, a large number choose to work in sectors such as textile shops or as office assistants and on the hospitality side. The huge scarcity of native labourers in sectors requiring hard work has triggered the migration of poor people from states like West Bengal or Bihar. Even though the latter get Rs 500-700 per day, many Malayalis prefer white-collar jobs which pay Rs 200-300 per day. And they are the one prominent section that searches for easy ways to make money… Not just lottery, I have friends who have lost several lakhs investing in superstitious wristbands and lockets sold online that promise luck or to double their money,” Venu says.
He argues that Kerala’s unemployment numbers are misleading. Kerala has the highest unemployment rate among the big states as per the Economic Review —7.4 per cent compared to the national average of 2.3 per cent. “Those registered with employment exchanges are people who don’t have government jobs. It doesn’t mean they are all jobless. There is a huge population that chooses to retain underpaid jobs in the service sector,” the writer says.
Flaying the government’s involvement in lotteries, Venu adds, “Like the way lockets are sold online promising luck, the government is selling dreams. After all, the basic idea of lottery itself is gambling, and here the government is running that business with hype and advertisements.”
With Kerala not seeing a growth in job-generating industries, the number of white-collar jobs has been falling, thus adding to the problem. Lesser cash also comes combined with a highly consumerist society that puts a premium on spending. Kerala has one of the highest monthly per capita consumer expenditures in India, both in rural and urban areas, as per the National Sample Survey Organisation data.
Traditionally too, schemes offering easy cash or promising to double money have done well in Kerala. With its huge inflow of remittance money from abroad, particularly the Gulf, the trend of private finance companies luring people with unrealistically high returns started in the 1980s.
In the 1990s, a ponzi scheme known as Aadu-Thekku-Manjium promised people who bought a goat for Rs 1,000, Rs 1 lakh after 20 years; and those who bought teak worth Rs 2,000, Rs 2 lakh after 20 years. Soon after collecting money, the firm folded up, fleecing hundreds. There have been several other such ponzi schemes since.
While the government has made arrests after each such ponzi scheme went bust, the cases have dragged on.
At least two candidates of the Left in the coming election have acted in advertisements of similar private finance firms, promising unrealistic interest rates.
However, the last time the lotteries made any kind of political news was in 2008 when ‘lottery king’ Santiago Martin, who had allegedly defrauded the Sikkim government of over Rs 4,500 crore, contributed Rs 2 crore to CPI(M) mouthpiece Deshabhimani. After the controversy broke out, the party had to return the money to Martin and remove heavyweight Malabar leader E P Jayarajan as general manager of the publication.
V Dileep Kumar, a marketing executive with a private surgical equipments firm, belonging to Peruva village in Kottayam district of Kerala, remembers getting the call that “changed my life” in November 2015, from a lottery hawker near his house.
“He told me that one of the two lottery tickets I had purchased that morning had won a prize of Rs 1 lakh. I had spent Rs 80 on the two tickets.” The prize money was 10 times his salary.
The Rs 63,000 he got after tax helped him repair his home. In his village, Kumar continues to be known as “the luckiest man on Earth” for winning more prize money than anyone else around.
He continues to try his luck, he smiles. “Whenever I get an intuition, I go and buy a lottery. I have won many prizes, even today I won Rs 3,000.” He believes he has cracked the “secret code”. “Four is my lucky digit. So I mostly take a ticket if its six digits end with 4. After I won Rs 1 lakh, I won many more prizes worth Rs 5,000, Rs 25,000 etc.”
Pathmanabhan, a roadside vendor in his mid-60s, sells lottery tickets at Payyoli near Kozhikode, along with lime juice and toffees. His customers book tickets over the phone and pay later. He keeps their tickets and informs them if they win.
One day in May 2014, he had 25 unsold tickets left with him and, on a lark, called up a regular customer, Kunjaamu, to check whether he wanted a ticket. Kunjaamu asked him to keep five tickets for him that he would collect later. One of those five tickets, of Akshaya lottery, won a Rs 65 lakh prize. Pathmanabhan was much celebrated in the state media for ensuring Kunjammu got his prize, though the vendor who still struggles to make ends meet could have easily pocketed the amount.
Many of the lottery retailers are located next to medical colleges, where relatives of patients who need money make easy customers. B Ramachandran Nair, who sells lotteries in front of Kottayam Medical College, says nearly 30,000 tickets are sold per day in the neighbourhood by around 60 lottery sellers, who draw people from remote villages as well as nearby districts such as Idukki and Pathanamthitta.
He claims to sell at least 300 tickets per day, priced at Rs 30, Rs 40, Rs 50 or Rs 100. Seven years ago, one of his customers won Rs 20 lakh and his commission was Rs 90,000, Nair says. “Mostly customers win smaller amounts, like Rs 5,000 or Rs 10,000.”
One of those winners this month, Nair recalls, was a housewife in her 40s. Her husband had been admitted to the Kottayam Medical College hospital for more than three weeks when a ticket she had bought from him won her Rs 5,000.
In 23 years of selling tickets near the college, Nair says, “I have purchased an acre, ensured that my daughters completed their higher education and have built a house. Most of my relatives are government officers, but I have never felt ashamed of my job.”
The big lottery winners of the past, however, are reluctant to talk about the change in their fortunes. A Rs 1 crore prize winner and another who won the Kerala bumper of Rs 3 crore refused to identify themselves. The bumper winner said he had only faced troubles since his win. “Many of my relatives came making claims on the money. It led to a court case too. Kindly don’t call me again,” he said, disconnecting.
Others have faced problems of a different kind. In 2012, an 80-year-old Haryana resident, Kishan Chand, sat on a dharna outside the Kerala Secretariat demanding his Rs 1 crore prize from the Karunya Weekly Lottery draw. He was among the 50-odd winners from other states whose claims had been disputed that year by the state Lotteries Department. The reason was suspected money-laundering.
There were media reports of business men from other states purchasing tickets from the actual winners so as to launder their black money through the prize. A Crime Branch probe was ordered by the government even as the Lotteries Department held back prizes. No official is available on record on how many such cases are being tried.
Officials say the Kerala border districts which show maximum lottery sales could actually be seeing smuggling of tickets out of the state in bulk, where they may be cornered by those with money, to ensure more chances of winning a prize.
Last year, Kerala specified in court that people visiting the state could purchase the state’s lotteries, but would have to produce the original ticket with proper evidence to claim rewards.
No one is likely to take away West Bengal migrant worker Sheikh’s Rs 1 crore prize money though. What made his story even more poignant was that the 22-year-old, scared of being targeted by thieves after winning, stayed at a police station overnight, till the banks reopened the next day. Back home in West Bengal, he has to wait for a PAN card before he can claim the money.
A senior lottery official says often there were problems due to ticket digits getting repeated due to a printing error. “There are also cases of customers forging digits. For instance, if a prize-winning ticket’s last four digits are 1088, people with last digits 1033 change these to 1088. Many lottery hawkers and even officials have faced serious trouble for not catching such forgeries,” he says.
The state’s seven weekly lottery brands each have draws on different days of the week. Results are first made available on the Kerala state lottery website.
Four times a year, there are bumper draws, mostly during festival seasons, the prize ranging from Rs 3 crore to 10 crore.
There is no tax for prizes below Rs 10,000. For prizes above Rs 10,000, the government deducts 37 per cent tax. So people who win Rs 1 lakh get Rs 63,000 after tax deductions. Bumper prizes though face 45 to 48 per cent tax.
Prize money of up to Rs 1 lakh is dispersed from district offices while amounts above that have to be collected from the Lottery Department in Thiruvananthapuram.
Apart from the winning ticket, most of the lottery brands offer Rs 5,000 to a person whose ticket has the same first four digits, and Rs 10,000 if five digits match.
Incidentally, a lot of prize money remains uncollected as winners either misplace tickets or forget about them after having made the purchase. Between 2010 and 2015, such money with the Kerala Lottery Department amounted to Rs 291 crore. “Usually unclaimed money is kept aside for a year and then added to the state treasury,” a lottery official says.
It was under the CPI(M) patriarch E M S Namboodiripad that the state launched own lotteries, and the Left has rarely taken a stand against the same despite criticism about lotteries exploiting the poor and offering unreasonable dreams. Others have questioned the consequences of letting a population “gamble officially”.
In 1999, the Supreme Court had held that the right to sell lottery tickets was not a fundamental right as lottery was a not a “free trade” like other trades, and had allowed states to ban lotteries. States like Tamil Nadu and Karnataka, once key players in the business, banned them (in 2003 and 2007 respectively).
Now Kerala is among 12 states, including West Bengal, Maharashtra, Goa, Punjab, Madhya Pradesh, Sikkim, Assam, Arunachal Pradesh, Meghalaya, Manipur and Nagaland, where lotteries are sold. The law allows only state governments to run lotteries, but many have handed over the business to private players.
In 2011, the state government began linking lotteries to philanthropic activities. The proceeds of one of Kerala’s most popular lottery brands, Karunya — the same as won by Sheikh — go to a government scheme that offers financial help to poor families with members fighting serious diseases. The publicity and promotional measures for Karunya remind customers that buying its lottery is not just a ticket to luck but also “touches the lives of poor”.
K M Mani, a veteran leader of the Kerala Congress (M), has been known to say that introducing the scheme in 2011, when he was the finance minister, was one of his major initiatives for the poor.
There is a surge in resources from lotteries under Chandy as the state government has introduced newer lottery brands. At his press conference last week, talking of Karunya, the CM said, “So far, we have paid out Rs 1,200 crore through this fund as cost of health and medical care to the poor and weaker sections.”
V S Achuthananthan, the veteran CPI(M) leader who is among the frontrunners for CM should the party win, had fought Santiago Martin tooth and mail over the donation to the party mouthpiece, even embarrassing own comrades in the process.
However, Achuthananthan doesn’t think lotteries themselves are social evils, adding that many of his friends are lottery sellers while others routinely buy tickets. Admitting that it is mostly the poor who buy them, the CPI(M) leader says, “For them, it’s a harmless dream as winning the money could resolve many of their problems that otherwise they wouldn’t be able to do in a lifetime. It is a livelihood question too, with hundreds of lottery sellers and their organisations involved in the trade… And for the government, it is a major revenue source without much investment.”
To those like Kumar, who now has winnings of more than Rs 2 lakh from lottery tickets, the reason people like him continue to try their luck is self-explanatory. “People like me have to shell out a minimum Rs 15-20 lakh to build a decent house, which I can’t afford to do on my salary,” he says. “So, everyday everyone hopes to win a lottery.”