Gambling on Culture:
State Lotteries as a source of funding for culture - the arts and heritage

QUESTIONNIRE RESULTS ANALYSIS.

This presentation has been designed to compliment the introduction and overview of the survey results that you can find in the conference reader.   

I would like to start this presentation by discussing the context and scope of cultural lotteries.
CIRCLE members, representing 29 countries in Europe have responded to the questionnaire and first indications are that many more countries than originally anticipated have state lotteries which use a share of their national lotteries as a way of financing culture. 

To be precise, our data suggests that 26 of the respondent countries have some sort of state regulated lottery (only Andorra, Lithuania and Russia provided a reply that they had no state controlled lottery). 

Of the 26 countries that have a state or national lottery, 16 replied that some revenues were dedicated to funding for culture - the arts and/or heritage.  You can see them highlighted here. 

Although not all countries were able to complete the full questionnaire we were interested to learn about arguments for and against state lotteries for culture and so, before we discard the countries without a state lottery or without a state lottery that provides funding for culture, we should note that several of these have experienced some sort of public debate in recent times on the subject or are in the process of implementing a lottery. 

This is, for example, the case of Croatia which has recently passed new legislation allowing revenue from state lotteries to be used for the funding of culture and the case of Poland which is waiting for similar legislation to be passed.

Replies from all countries are interesting, many reflecting the current political and historical climate of the respective country and therefore they have been included in the conference reader.

One of the most interesting replies came in the form of a paper discussing the former lottery in Hungary; the only known country to have had a state lottery which provided money for culture and then to have disbanded it.  

Stability of cultural funding
We can see from the survey replies that 11 countries confirmed that no identifiable measures were in place to ensure the stability of cultural funding.  Only the Netherlands, Sweden and the Slovak Republic claimed to have measures to protect cultural funding levels. 

Other countries such as Finland indicated that the state provided “fill up” grants to meet shortfalls. But other than this the only identifiable measure for protecting cultural funding levels (at least, provided by the questionnaire replies) is the fixing of a sum for culture and the setting up of a reserve fund for emergency cases. 

Italy provided such a case where a fixed sum for heritage has been met annually, however, it is interesting that this fixed sum represents a ceiling amount (restricting percentage increases) rather than a measure to protect cultural expenditure levels from dropping.  Some respondents expressed scepticism as to how far measures were necessary given that also state budgets were subject to fluctuation.

Operating and Management Framework
The questionnaire aimed to identify the way in which institutional frameworks operate and manage lotteries. 10 country respondents reported that public operators handled the lottery – however, a number of these respondents also acknowledged that the actual management work was farmed out to “companies”. 

5 respondents noted that private companies conducted the management and operation of their respective lotteries – however the implication in some cases, being that the companies operated under strict guidelines set by the respective Ministries.  Germany’s federal structure allowed for multiple models to be applied.  

More indepth informationon  the allocation and distribution of lottery resources, can be found in the  conference reader.  Suffice to say that 8 countries admitted that restrictions were placed on the allocation of cultural funding but the examples cited had more to do with setting criteria for eligibility within funding programmes i.e. the decision to only support heritage projects and/or capital projects or projects that must ensure public access etc.  And these of course are peculiar to each country.

The share for culture in the allocation of lottery revenue
In most countries culture gets a small share of the lottery revenue. The Danish and Finnish lotteries both give generously to culture, 64% and 55% respectively. Few countries made the distinction between culture, arts and heritage and so in this chart, I have blocked these three categories together under the broad heading culture – so the percentage share of lottery revenues for culture per country looks like this:

As a quick aside, other sectors benefiting from lottery revenue included typcially welfare, health, science, developing aid, education, sport, youth and recreation.

Types of expenditure
Only 5 countries were able to give estimates on the types of expenditure provided in the fiscal year 2000.  The data suggests no specific trends but rather a reflection of cultural funding requirements identified by each respective government.

(-) Likewise only five countries (this time Belgium, Italy, the Slovak Republic, the United Kingdom and the NRW region in Germany) could  provide a breakdown of cultural sectors receiving lottery revenue.   I will not detail the results here, but I will say that although they were limited, at least the results we received serve to show that there is probably no set trend in lottery revenue destinations as far as cultural sectors are concerned.

Additionality or substitution
The question of additionality or substitution needs to be monitored in order for the cultural sector to respond to the possibility of precarious movements in funding practices.  The questionnaire that we sent out was designed to try to establish some trends in state support and lottery support for culture.  Unfortunately, many countries were unable to supply us with comparable data over a long period of time but nevertheless the emerging trend in some countries was that while state expenditure for culture is increasing, the share of lottery revenue is increasing at a greater pace.  In this case one can talk about additionality while in fact a slow form of substitution can also be identified. 

This is true in the case of Bulgaria – while in Bulgaria lottery revenue for culture is extremely marginal – the share of revenue for culture, provided by lottery increased from the year 2000 – 2001 by 0,03%

It is also true of Finland – where the percentage share of funding for culture coming from  lotteries has increased yearly from 32,6% in 1990 to 71,4% in the year 2000.  

In real terms one can see government expenditure rising form 249,4 million € in 1990 to 292,5 million € in the year 2000 – and of that figure lottery revenue was only 81,3 million € in the year 1990 and rose to 208,8 million € in the year 2000.

Although on a much less dramatic scale the same trend can be seen in the Netherlands, rising from 6,4% in 1996 to 9,4% in the year 2000.

And in, Norway. Here you can see great fluctuations in the lottery revenue share of support for culture but in fact the real figures show that these fluctuations are caused by jumping levels of government support for culture and that lottery funding has remained steady, gradually increasing over the years.

And the final example in this presentation, the United Kingdom (the lottery share increasing from 19% in 1996 to 38% in the year 1999). In real terms lottery revenue increasing from 336 million€ in 1996 to 494 million € in 1999.  While government total expenditure on culture decreased from1741 million€ in 1996 to 1313million€ in 1999.

The Slovak Republic reported both decreased government expenditure and lottery revenue in 2001. However, the percentage lottery decrease was less than the percentage government decrease thereby possibly following the same trend as the above mentioned countries.

In Denmark, the same trend could be said to be true from 1990 – 1998 but the latest figures for the year 2000 show increased government spending and a drop in lottery revenue. 

Countries that do not comply with the trend seen in the abive examples, are Estonia and Italy

In Estonia government expenditure for culture increased significantly in the year 2000, this was at the same time as lottery funding slightly decreased in real terms.

And in Italy lottery revenue for heritage has a fixed ceiling rate and therefore with increased government expenditure the percentage lottery revenue can be said to be decreasing.

Impact of the Lottery
There are few (if any) real impact studies on cultural revenue from lotteries in Europe and respondents were reluctant to give  a decisive opinion.  However, generally the view of lotteries is a positive one – at least in the immediate and short term.

Diane Dodd
Co-ordinator of CIRCLE