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Japan’s lottery rakes in declining revenues as younger generation gives jackpot chances a pass

PR campaigns, bigger prizes fail to stir jackpot frenzy with the young

by and

Special To The Japan Times

Several weeks ago Mavis Wanczyk, a 53-year-old woman from Massachusetts, won $758 million in the Powerball lottery — the largest single winner jackpot in North American history. Wanczyk said at a news conference that she had already quit her job and plans to “hide in bed.”

Wanczyk’s joke is easy to understand. Now that she’s rich she will undoubtedly be the target of salespersons, charities and others who would like to get a piece of her sudden fortune. Reportedly, her home is under police protection.

In Japan, that wouldn’t happen — or, it would be less likely to happen because the names of big winners of lotteries are not disclosed, though that probably has more to do with propriety than with caution.

Also, the lottery jackpots in Japan can’t compare with the Powerball or other lotteries in the United States. And as far as gambling goes, Takarakuji, the trademarked name for the lottery in Japan, can’t compare with pachinko (¥23 trillion a year) or various racing sports (about ¥4 trillion) in terms of revenue.

Last fiscal year’s sales of lottery tickets was ¥845.2 billion, the first time that the amount has dropped below ¥900 billion since fiscal 1998. In fact, revenues have been going down since fiscal 2005, when they peaked at ¥1.1 trillion.

The slide in sales is not surprising given that the overall population of Japan is declining, but the people who run Takarakuji are increasingly concerned because it seems that younger people are much less interested in buying lottery tickets than their elders.

Local governments are concerned, too, since they benefit from lottery sales.

Forty-seven percent of revenues goes toward prizes, 12 percent to administrative and other costs, and a little more than 1 percent to a special welfare organization. The rest goes to local governments, which rely on this money for things like infrastructure maintenance and public welfare schemes.

In April, the National Autonomous Lottery Council, which represents 20 major cities and 47 prefectures, launched a campaign to get more young people interested in Takarakuji. They solicited videos of “original dances” that are shown on YouTube and other internet platforms. The best of these has been selected, and the winner will appear in a TV commercial for a new lottery product called Bingo 5, in addition to receiving ¥1 million in prize money.

In the past, when the association wanted to boost sales, they simply increased the jackpot. In 2011, they introduced the Green Jumbo, whose top prize was ¥500 million, and in 2015 they increased the Nenmatsu (“year-end”) Jumbo to ¥1 billion.

This strategy found only temporary success, however. Sales increased in the years the jackpots increased, but in the following years sales resumed their downward trajectory. And it was mainly older people who bought more tickets.

The Ministry of Internal Affairs and Communications, which administers Takarakuji, said a study last fiscal year by the Japan Lottery Association found only 3.9 percent of people in their 20s and 8 percent of people in their 30s bought lottery tickets once a month or more, both down from a similar survey conducted in fiscal 2007, according to the Asahi Shimbun. The study also found the portion of people in their 50s and 60s who buy lottery tickets more frequently is about 15 percent, a number that hasn’t changed substantially over the years, the paper reported.

Another difference between Takarakuji and American lotteries is that winnings in Japan are not taxed (after taxes Wanczyk will receive a little more than half of her jackpot since she decided to take her prize all at once instead of in monthly installments).

Japanese winners don’t even have to report their windfall on their tax returns. However, if a winner gives any of their money to other people, the recipients would have to report the cash and pay a levy on it just as they would for any “gift.”

Strictly speaking, the lottery itself is considered a kind of tax, since local governments are the main beneficiaries, and local governments are supposed to be in agreement about the administration of Takarakuji, which is why Tokyo has come under fire from a number of municipalities for trying to commandeer the lottery for its own uses.

On July 27, during a national meeting of prefectural governors in Morioka, Tokyo Gov. Yuriko Koike reportedly said Tokyo would establish a special lottery to help offset the ¥35 billion needed to use venues outside of the capital for the 2020 Olympics. Last year they issued a similar special lottery, also to address Olympic cost overruns, and some prefectures complained.

The government of Sapporo objected strongly to Koike’s announcement, saying Tokyo must provide a proper breakdown of the ¥35 billion it is seeking, media reports said. In principle, Tokyo has to gain permission from the local government lottery association to carry out a Takarakuji on its own. But because it is so powerful, it seems to have proceeded without a consensus.

In any event, sales of the special lottery started on Aug. 30 and will end Sept. 19, with the winning number to be drawn Sept. 21. There are three top prizes, each worth ¥250 million.

But the fact that winnings aren’t taxed isn’t a sales point the National Autonomous Lottery Council can use. What they need is better public relations, and in order to get more effective publicity they need to know their target, so every so often the association surveys the anonymous winners. Last fiscal year they received responses from 1,277 people who had won prizes of at least ¥10 million. Sixty-three percent were men; specifically, 40.5 percent were men over 60. Only 5.6 percent and 4.9 percent were men and women, respectively, under 30. By occupation, the vast majority were company employees, while 12.5 percent were homemakers.

More significantly, 80 percent of the winners were habitual lottery purchasers. However, buying many tickets at one time doesn’t seem to increase your chances of hitting the jackpot: 20 percent of the winners purchased 10 tickets at a time and 20 percent bought more than 30, while those who bought 100 or more accounted for only 11 percent. And 3.6 percent of the winners were first-time purchasers. Superstition also plays a role, as 41 percent always bought their tickets at the same vendor and 11 percent sought out vendors where they had heard people had won in the past. Many keep their tickets in the household shrine, hoping that their ancestors will somehow bless the ducats.

Still another difference in Japan is that when there is no winner, or the winners don’t claim their prizes, the money isn’t rolled over into the next lottery. In Japan, when a jackpot isn’t claimed for one year, the prize money is distributed to local governments.

At present, there are 83 prizes each worth at least ¥100 million that have not been claimed yet, and which will be forfeited when their respective one-year deadlines come due.

This may also be a matter of poor marketing, because while there are lots of advertisements promoting Takarakuji prior to the drawing of the lottery numbers, there is almost nothing afterward. If the association wants more people to buy tickets, maybe they should try to get winners to appear in public and show that there actually are winners.

Yen for Living, a column that covers issues related to making, spending and saving money in Japan, runs on the second Saturday of every month.