The terrible NLA-KGL Deal: How KGL makes millions in profits while NLA makes zeros

In 2006, the National Lotto Act (Act 722) was passed to regulate lottery in Ghana. Section 2 of the law indicates the objectives of establishing a National Lotto in Ghana. It unambiguously states that “National Lotto shall be conducted for the purpose of raising revenue for the nation,” and for other purposes contained in the Act, which include the provision for the establishment of a lottery for needy, orphans and destitute children, the aged, and mentally or physically afflicted.

The same law establishes the National Lottery Authority (NLA) as the ONLY body that can conduct or operate lottery in Ghana. The law, however, prevents NLA from being a retailer or directly selling lotto to individual customers. Instead, the law requires NLA to sell lottery through companies that it licenses as Lotto Marketing Companies (LMCs). Thus, no company is allowed to sell national lotto in Ghana without being an LMC. Any company that does so acts illegally.

Section 28 of the NLA Act then provides that all LMCs of the NLA SHALL be paid a commission determined by the Board. No LMC is allowed to operate or sell lotto and keep the money for itself as if it were another NLA onto itself.

Section 32 of the NLA Act then says, “there is established by this Act, an account called the Lotto Account.” The law requires that all proceeds from sales of National Lotto, any fines imposed on LMCs and other resources must all go directly into this account. The same NLA law then states clearly in Section 32 (3) that the NLA shall use the funds in the Lotto Account to pay winners of lotto and also pay the appropriate commissions of LMCs as determined by the Board.

So, what happens to excess funds in the Lotto Account? The law says in Section 32(4) that NLA “shall transfer the net balance in the Lotto Account on a MONTHLY basis to the Consolidated Fund” of the Republic of Ghana.

But what if people win more from the lotto than what goes into the Lotto Account? This is also catered for by the NLA law. Because the purpose of Lotto is to raise revenue for the state, the state assumes responsibility for any losses. So Section 33 of the NLA Act is titled: Deficit in Lotto Account to be charged on Consolidated Fund. It elaborates that “if the amount standing to the credit of the Lotto Account is at any time lesser than the amount of payments required to be made out of the Lotto Account, the difference shall be charged on the Consolidated Fund.”   

So, revenues from the sale of NLA’s of lotto, whether sold online or offline, are supposed to go directly into the NLA Lotto Account. No LMC is allowed by law to keep sales revenue and periodically pay parts of the revenue generated from the sales of NLA’s lottery to NLA. The sales revenue must go directly to NLA’s lotto account upon sales, and NLA is responsible for paying winners from the Lotto Account.    

Enter the terrible NLA-KGL deal:

In 2019, the NLA granted what it called a provisional licence to KGL Technology Limited to sell national lotto online and use USSD (short code) as an LMC of the NLA. This was after KGL had started selling online lotto illegally and was fined GH¢10 million by the NLA. And this was at a time when digitalisation was fast shifting the lottery business online instead of the traditional analogue sales in lotto kiosks.

By 2023/2024, almost 80% to 90% of all stakers of national lotteries were doing so online through their mobile phones. Thus, almost 90% of the NLA’s core business and revenue stream had moved online. In other words, 90% of NLA’s revenues into its Lotto Account would have been coming from the online sales of its lottery.

But the main source of the NLA’s revenue was in the hands of KGL through an obnoxious, state-fleecing licensing agreement signed off by the previous Board and leadership of the NLA.   

After the expiration of the provisional licence, the NLA leadership granted KGL a new 10-year licence in 2022 (to expire in 2032). Then, in 2024 (before the expiration of the 10-year license), the leadership and Board, curiously and strangely, replaced the 10-year license with a 15-year license (2024 to 2039). The reason given was that KGL had come to the Board to request to be granted an exclusive licence. So, the new 15-year license gave KGL the exclusive rights to operate NLA’s 5/90 lottery online and via USSD short code.

And here is the sad part:

Even though KGL is supposed to be an LMC of the NLA, sales made by KGL do not directly go into the Lotto Account of the NLA as required by Law. Revenues generated by KGL from the sale of NLA’s 5/90 lotto go directly into KGL accounts. The NLA does not know how much revenue KGL generates from the sale of the NLA’s lotto every day, every week and every month.

KGL pays lotto winners directly from its accounts, and the balance is kept in KGL accounts. KGL does not have any obligation to transfer funds into the Consolidated Fund of the Republic of Ghana. KGL only pays to the NLA, a license fee and some pre-determined amounts to the NLA’s Good Causes Foundation, and Lotto Stabilisation Fund.  This is how KGL has literally become the NLA and turned the NLA into its LMC.

Meanwhile, if we wake up tomorrow and KGL is nowhere to be found, NLA will bear all the responsibility of paying all winners who may have bought their NLA 5/90 coupons through the KGL platform. This is because KGL is only selling the coupons on behalf of the NLA.

Sadly, but not surprisingly, since the NLA-KGL deal, NLA’s profits for the state, by way of its annual contributions to the Consolidated Fund, have seen a dramatic and heart-wrenching decline.

Official figures provided by the Ministry of Finance in a response to an RTI request by The Fourth Estate reveal a very troubling and systematic pattern of decline in NLA’s contribution to the Consolidated Fund since the terrible NLA-KGL deal started in 2019.

According to the figures from the Finance Ministry’s document to The Fourth Estate, signed by the Chief Director of the Ministry, Patrick Nomo, in 2017, the NLA contributed GH¢26.1 million into the Consolidated Fund. In 2018 (the year before the start of the first NLA-KGL deal), NLA’s contribution to the Consolidated Fund increased to GH¢37.1 million.

In 2019, which was the year in which the NLA-KGL deal commenced, NLA’s contribution to the Consolidated Fund decreased to GH¢17.7 million. The following year (2020), the pattern of decrease continued to GH¢16.4million. Then in 2021, the first year of Samuel Awuku’s tenure, NLA’s revenue for the state further decreased to only GH¢6 million.

The records for the following years are even more harrowing. In 2022, NLA’s contribution to the Consolidated Fund was ZERO (no profit made). Again, in 2023, NLA’s contribution to the Consolidated Fund was ZERO (no profit made).  

All this while, KGL, which had been selling NLA’s 5/90 lotto online and via USSD short code as an LMC of NLA, was making millions in profits.

In 2024, for example, KGL says it made only GH¢70 million profit from the over GH¢3 billion revenue it generated from NLA’s business. But NLA’s profit for the same year (Contribution to the Consolidated Fund) was again, ZERO. So, while the driver (KGL) made GH¢70 million profit from the NLA car, the car owner (NLA) made ZERO profit.