1. Ethics

Bolivia’s new digital lottery is symptomatic of the nation’s bigger problems

As many Bolivians continue to struggle for food and access to safe water, the introduction of a new digital lottery in 2018 is symptomatic of the biggest problems currently facing the nation, and a solution only destined to make matters worse.

Gurly runs a newsstand in Sucre, Bolivia’s beautiful colonial capital. She works on the corner of the plaza, a crowded spot where locals jostle for space with tourists on their way to one of the city’s many museums. Nearby, crudely drawn cartoons from 90s TV shows are sprawled across the pavement, whilst teenagers take advantage of the perpetual sunshine to practice their breakdancing. A canopy protects Gurly from the midday sun, whilst on all sides she is surrounded by the garish green posters advertising this month’s national lottery, now only a week away.

Every shop window has found space for posters and flyers advertising the lottery, whilst several uniquely numbered tickets are pinned to the wall next to where Gurly sits. She has been selling lottery tickets for eight years now, though she doesn’t play it herself, remarking that ‘only the people who really need it play the lottery.’

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In South America’s poorest nation there are many who could do with a top prize of more than $15,000*: according to the World Bank, 38% of Bolivians were living below the poverty line in 2015, surviving on less than $1.90 a day.

However, at a cost of $1.45 per ticket, the chance of a miracle comes in at almost an entire day’s expenses.

As many Bolivians continue to struggle for food and access to safe water, the introduction of a new digital lottery in 2018 is symptomatic of the biggest problems currently facing the nation, and a solution only destined to make matters worse.

Bolivia’s shiny new lottery

In recent years, national lotteries in Bolivia have taken place almost once each month, with a two to three week window in which players can buy tickets. However, last October Bolivia’s Gaming Control Authority (AJ) approved a licence for the National Lottery of Charity and Health (LONABOL) to run a digital lottery. Under the new format there will be a digital televised draw every Friday, with weekly prizes and progressive jackpots. Ticket prices will remain the same, as will the chances of winning: but the opportunity to spend one’s wages on the game will increase as tickets become available for purchase every day.

Reports suggest that $723,000 has been put aside for purchasing equipment and marketing, whilst plans are in place to distribute 1,000 terminals in major cities. According to LONABOL’s former executive director, Rossio Pimentel, the marketing has been ‘massive and aggressive’ in order to ensure that people learn how to play the electronic lottery.

LONABOL’s marketing makes it clear who these people will be.

The lottery is plainly advertised to low income Bolivians, a number of whom have become famous for their colourful and distinctive fashion as seen on the cover of LonelyPlanet guidebooks. Although the image has become synonymous with a romanticised idea of a traditional Bolivia, these are the people most likely to sit under the poverty line. Unsurprisingly, the tourism they generate has not brought them riches.

Accordingly, the lottery’s mascot is a man dressed in traditional Andean clothes, but loaded with material wealth. He is modelled on El Ekeko, the Tiwanakan god of abundance and prosperity. The Tiwanakans were a pre-Colombian civilisation of the Andean Altiplano, and in their mythology the Ekeko brings good luck and monetary wealth to its worshippers. To this day, miniature figurines of the god are still placed in homes as an offering, carrying miniatures of what the owner desires, from tiny cereal boxes to wads of fake cash.

LONABOL’s take on the Ekeko features on every ticket and poster, and a real-life version even appears at every draw.

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Christina and her husband fall perfectly into the target market, down to the traditional outfits and household Ekeko. She sells newspapers from a table on the corner of the plaza whilst her husband polishes shoes just across the road - both low income jobs.

Christina tells me she’s been playing the lottery for forty years and her eyes light up when asked why: ‘It’s a tradition! Me, my husband and my friends all play. Though I suppose I’ve lost quite a lot,’ she laughs. Christina tells me she thinks tickets are quite cheap, though acknowledges that its equal to the price of several meals. She smiles as she tells me that occasionally she wins her money back, sometimes even double the price of the ticket.

She says she currently buys two to three tickets a month, a relatively harmless amount. However, purchasing that number of tickets for a weekly draw may amount to almost half her income, and Christina is happy to tell me that she’d play more if the lottery were once a week.

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Just trying to help?

Following the announcement, Rossio Pimentel, the former Executive Director of LONABOL, stressed that: ‘The total of the resources generated by ticket sales, after operating costs and prizes, are destined for social assistance and wellbeing, because the National Lottery works to save lives.’

LONABOL is a decentralised government department under the umbrella of the Ministry of Health, and it is currently the only institution authorised to administer lotteries in the country. It is a non-profit association which aims to provide support for some of Bolivia’s poorest citizens through ticket sales. Indeed, Article 12 of Bolivia’s Law of Gambling and Games, signed off by President Evo Morales in 2010, decrees that any revenue generated by lotteries will be destined for charity and health purposes after running costs. Accordingly, such revenues are also tax free.

A select few of Bolivia’s poorest have indeed been beneficiaries of prosthetics and operations that they otherwise could not have afforded. In October, Pimentel proudly claimed that more than 100 people were given assistance in the first semester of 2017, whilst money was also earmarked for asylums, schools and homeless shelters.

LONABOL’s efforts are more substantial when one considers what little they have to give. Recently, LONABOL has been running on a deficit, and the last few years have seen a concerted effort to improve the lottery’s popularity and raise funds: 940,000 tickets were made available for sale through 2017, up 220,000 from 2016 and almost double the 500,000 in 2015. The number of lotteries held in Bolivia each year has also doubled in that time. Although sales records were also repeatedly broken in 2017, the digital lottery has been brought in to boost revenues for destined for charity.

However, using targeted marketing to encourage low income individuals to play the lottery in order to raise funds for public services, is tantamount to a regressive tax on the poor. Though a higher turnover may lead to more struggling Bolivians receiving support and social assistance, these are the same people who will ultimately finance these projects.

Speaking with individuals across Sucre, the lottery appears to be shunned by those who work for for the minimum wage as waiters, guides or even tiendas like Gurly. Here, charity is being charged to those with even less to give, and the vast majority of the estimated half a million players will not see any of the charity themselves. An increase in poverty is only likely to exacerbate the problems that LONABOL wants to help.

Bolivia’s bigger problems

Although LONABOL’s fund-raising methods may seem dysfunctional – targeting those most likely to need help themselves - the agency may be as desperate for resources as the people playing the lottery.

The reliance on additional revenues for social services may be rooted in Bolivia’s ever-growing informal sector: 62.3% of Bolivia’s total economy is neither taxed nor monitored by the government, making it the largest informal economy in the world. In the city of El Alto, citizens were forced to construct their own sewage systems due to the lack of resources of the public and private sector – as well as a lack of interest. In the southern city of Potosi, state-run mines that were abandoned in the 90s have become a free for all, with many still digging to get their hands on any metal they can. As the formal sector shrinks so does tax revenue, which means less money in the pot for public services.

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Bolivian economist Juan Carlos Zuleta tells me over the phone that under the current administration the informal sector is likely to keep rising as government funding fails to fortify the public sector. ‘Much of the budget has gone to a very tiny part of the country: it has been used to fund very small projects or large projects will little success. A lot of money has been wasted and people are starting to realise that,’ he tells me.

Zuleta’s concerns echo those of Bolivian newspaper El Deber, which recently held President Morales’ own accounts up to scrutiny, pointing to the fact that his assets, net worth and income have vastly increased during his time in office whilst many Bolivian’s continue to live in poverty. Zuleta believes that even though poverty has lessened in the past decade, there’s still a long way to go before Bolivia can engage in any meaningful development. ‘This has been a very centralised government. I don’t think it’s going to be part of the solution’ says Zuleta.

In fact, El Deber reported in December that just 8% of the state budget had been allocated to municipalities over the past 11 years, and the city of Santa Cruz has turned to gambling in order to generate its own resources. The city is pushing to have its own municipal lottery approved by the Gaming Control Authority in order to strengthen its municipal health insurance, and plans to install 1,700 terminals throughout the city. The gambling industry has been identified as an opportunity to raise extra funds, and if their attempt is successful, others may follow suit.

Same old story

Operating in 80 countries in six continents, with member revenues amounting to $250billion, the World Lottery Association (WLA) claims supremacy over the best practices and ethical standards for lotteries around the world. Yet whilst the WLA continues its relentless efforts to extract money from the world’s predominantly poor players, the famously inward looking Andean nation doesn’t subscribe to its wisdom.

But although Bolivia sits outside of the WLA bubble, the tactics employed by LONABOL are entirely consistent with the behaviour of lotteries the world over. Whether the lottery is used to fund Team GB or prosthetic limbs, poor people are overrepresented among the ranks of players who are ultimately paying for such projects.

LONABOL is certainly not to blame for the economic climate in which it must operate, but it will continue to employ strategic marketing and digitisation to utilise the traditions and habits of the poorest in society to fund itself and its charitable enterprises: this year’s push on gambling will no doubt raise revenues for both LONABOL and the municipalities that choose to employ similar streams of income.

However, as those who operate inside Bolivia’s informal economy are used to raise funds for these services, mobility into the public sector will only become more difficult: as with all the lotteries, there are far more losers than winners.

Though a world away from our own, the case in Bolivia demonstrates the misleading utility of a lottery, and how desperation can take advantage of desperation. As money fails to reach those who need it, Bolivia gambles with its future just like those who play its games.

*Prices have been changed from Bolivanos to USD