Israel's regulation of gambling is having little effect on this wild market. The Ministry of Finance's effort to restrict the gambling market by addressing sports betting is irrelevant and insignificant, mainly because the figures show that sports are nowhere near being the main gambling engine.
Two things stand out in the annual report issued by European Lotteries, the roof organization for betting and lotteries in Europe, in which Israel is a member. The first is that sports betting accounts for only 10.7% of all gambling income - €9.33 billion out of €87.9 billion in 2016 (only 39 of the 70 European Lotteries organizations offer sports betting like Israel's Toto betting). The second is that the report explicitly mentions Israel, awarding Israel the dubious honor of citation as a very advanced betting country. Average annual per capita betting in the European Lotteries member countries is €44, while the average in Israel, Norway, and Switzerland is €100. At the other end of the scale is Russia, with an average of €1. Israel has two authorized betting agencies: Mifal Hapayis (Israel National Lottery) and Toto (Israel Sports Betting Board), not to mention overseas gambling trips by Israelis, poker games, casinos, and illegal gambling.
European Lotteries includes 70 organizations in 42 countries: the 28 European Union countries, 10 other European countries, and four non-European countries (Israel, Azerbaijan, Turkey, and Morocco). Israel is represented in the organization by Mifal Hapayis and Toto. European Lotteries represents countries having government-sponsored gambling programs, like Israel.
One positive element in Minister of Finance Moshe Kahlon's effort to restrict the gambling market is Israel can be noted. The European Lotteries report shows that the net profit (the money allocated for the benefit of the community after deducting prizes and expenses) totals €23.5 billion, 27% of total gambling revenue. The corresponding proportions in Israel are 20% for Toto and 24% for Mifal Hapayis. The lower figures for Israel may explain the Ministry of Finance's insistence on enacting a law forcing Toto to increase its net profit margin to 23% of its current volume of activity.
Why is the profit margin in Israel so low? Baruch Dagon, who has been international relations manager at Toto for 15 years, explained to "Globes," "One of the reasons for Toto's low profit margin in comparison with other lotteries is the 63% allowance for prizes, compared with the European average of 40%. This results from the difference between lotteries and sports betting, in which the percentage returned as prizes is higher, but mainly from Toto's wish to be more attractive to gamblers because of the competition from illegal betting."
In contrast to Israel, the net profit in Europe from gambling - sports betting and gambling on lotteries as a whole - automatically goes to the countries state treasuries, which determine the purposes for which the money will be used. In 2016, the various European ministries of finance took €14.37 billion - 61.3% of the government gambling organizations' profits. In Israel, only in 2017 did the Ministry of Finance start getting its hands on the money from Toto and Mifal Hapayis under the gambling reform, and these two agencies will give the treasury NIS 2 billion in the next two years, only NIS 600 million of which will come from Toto. In other words, in Europe (and recently also to a small extent in Israel), gambling is a revenue instrument belonging to the state, which channels it to various needs that are not necessarily related to culture or sports.
Is the amount of money returned to sports significant in sports success and spreading a culture of sports? The figures show that it is. The leading countries allocating respectable sums from gambling lotteries profits are those with a pronounced sports orientation. Italy gave €4 billion in gambling money back to society in 2016, France gave €3.1 billion, the UK and Spain gave €3 billion each, and Finland gave €2 billion. "In Israel, whose population is almost double that of Finland, less than €500 million from the profits by Toto and Mifal Hapayis were invested back in society," Dagon says, "so it's no wonder that Israeli sports are in such a poor state."
Published by Globes [online], Israel Business News - www.globes-online.com - on November 2, 2017
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