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Moneyless Millionaires: What Happens When a Private Lottery Shuts Down

What Happens When a Private Lottery Shuts Down

In January 2020, Bulgaria’s government decided to pass a new law that terminates private lotteries in the country and allowed only the national Bulgarian Sports Toto to remain operational. This move raised lots of questions about private vs. national lotteries, and it also left numerous people wondering about actually receiving the money they’d won.

The New Law

On February 7, 2020, the new law that banned private lotteries became fully active.

The anti-private lotteries act was introduced as a part of the National Gambling Law. It banned private lottery companies from organizing such games, essentially nationalizing the entire process.

This is also the day when the distribution of lottery and scratch off tickets ended. Private lotteries lost their licenses immediately, which rendered them virtually incapable of operating. The only games of luck that remain out of the government’s control after the new rules for private lotteries were introduced include casino games, keno, bingo, raffle games, and all of their variations.

According to members of parliament, the change wouldn’t affect people who had already won sums through the games launched by the private lottery companies. In an official statement, it was reported that these sums had previously been collected through ticket sales. The invalidation of lottery licenses wasn’t to interfere with the payment of awards.

In real life, however, the situation proved to be quite a lot different.

Lotto Millionaires to Sue the State?

On March 1, 2020, two of the people who had won a severe amount of money through private lottery games in Bulgaria came forward on national television to report they weren’t getting paid.

National Lottery, the private company that lost its license, had it in its regulations that scratch-off millionaires would receive an initial lump sum payment of 200,000 leva (116,815 USD), followed by annual payments of 40,000 leva over the coming 20 years.

Winners agreed to these conditions, oblivious of the upcoming changes.

National Lottery got its license as an operator in 2015. Since January 2020, it distributed one award of 12 million leva (7 million USD), one award of three million leva, six awards of two million leva, and multiple prizes of 0.5 million leva.

Ekaterina Dimitrova, one of the latest winners, reported that she’d received her 200,000 leva, and her first annuity payment was bound to arrive in the summer of 2020. This isn’t certain to happen now. Another lotto millionaire – Dimitur Miriaev – reported that he’d received only 240,000 leva out of the one million he won.

Both of these people, as well as other big private lottery winners, are considering to sue the Bulgarian state. According to them, the regulatory changes were introduced way too quickly, without coming up with guarantees for the people still getting their payments.

The State Commission on Gambling investigated to determine what had been happening to the funds generated through ticket sales. As per an official National Lottery announcement, there has to be a guarantee fund that holds all of the money to be paid out to the winners periodically.

The results of the investigation were pretty shocking. State Commission on Gambling officials found out that such a fund didn’t exist, and there was whatsoever no money to pay the former winners with.

People who called the National Lottery in an attempt to track their money were told that the National Revenue Agency had taken over control and frozen all bank accounts. Since then, the customer service hotlines have become disconnected, and it’s no longer possible to receive information on the state of affairs.

A Real Regulatory Mess

The state is at fault for the messy situation with the national and private lottery operators.

The initial changes to the rules for private lotteries envisioned the setting up of a national guarantee fund. Eventually, the text was revised, and the provision was removed from these regulations.

The Bulgarian Finance Minister advised the lottery millionaires to seek their money via a trial.

According to legal professionals, however, the winners shouldn’t be suing the National Lottery – a company that no longer exists. Instead, they could initiate court action against the Bulgarian state in the European Court of Human Rights in Strasbourg or the Court of Justice of the European Union in Luxembourg.

There’s already such a precedent set in a trial against the Hungarian state.

Whenever such measures are introduced, a transition period has to be envisioned. It’s impossible to discontinue the licenses of private lotteries effectively immediately without affecting the lives and the earnings of numerous people.

It’s still too early to tell what’s going to happen in the disastrous Bulgarian scenario. The millionaires who haven’t received their payments yet are adamant that they’re going to sue someone. The process can be very long and expensive for all parties involved.

Private vs. National Lotteries: How to Choose

When making a decision, you have to consider several things. The first is to ask, are private lotteries legal in the respective country? The second is the legitimacy of private lottery games – some are simply better than others. Finally, national and private lotteries have to be compared for the conditions of participation and the payouts.

Situations like the one that occurred in Bulgaria aren’t that common.

Most private lottery enterprises have a license valid for a specific time. Also, there are legal protections in place to ensure the rights of players and winners.

You can have a lot of fun with both private and national lottery games without fear of consequences. National lotteries are simply considered a bit more secure since they are carried out under governmental supervision, and a portion of the money generated through ticket sales will be allocated to charitable causes.