Rehab has ended a lottery programme that was once a huge revenue generator but has in recent years seen the organisation embroiled in costly court actions and controversies as income and State support dwindled.
Elmco, the company that ran scratchcard lotteries and radio bingo on behalf of Rehab and other charities, ceased trading this month citing "accumulated financial losses" as a result of "changing market dynamics and rapidly evolving technology".
The move will come as a blow to charities that used the lotteries to raise money and to a dozen radio stations that had long-running revenue-sharing deals with the lottery provider.
Elmco took the decision after Rehab announced it was ending its partnership with the scheme. As well as leaving the scratchcard market, Elmco has stopped offering radio-bingo services to Tipp FM, South East Radio, Radio Kerry and Shannonside Northern Sound.
Elmco said it would pay in full any prize money won up to December 1st, the day it stopped selling scratchcards and providing radio bingo. Winners have until the end of January to claim their prizes. The company added that any financial commitments to local charity partners would also be fully honoured.
“We recognise that many customers will be disappointed by this announcement,” said the company’s general manager, Stephen Broderick. “This decision was extremely difficult to make and comes following an extensive exploration of all other options for this business.”
“Loss-making enterprise”
Rehab said:“Continuing losses at Elmco amid a difficult trading environment for lotteries led us to have to make a tough decision which required Elmco to cease trading. As financial sustainability is a key pillar of Rehab’s long-term strategic plan we could not continue to be party to a loss-making enterprise.”
A spokeswoman added: “We are currently diversifying our fundraising endeavours, focusing on a new strategic direction with a strong emphasis on local fundraising for local services.”
In 2014 the Rehab Group lost a High Court challenge to the Minister for Justice’s decision to abolish the charitable lotteries scheme, which had been set up to compensate charitable lotteries whose prize funds were capped to protect the National Lottery.
The scheme was initially funded from the National Lottery surplus, but from 2005 it got 35 per cent of its money from the Department of Finance. Rehab received the most of the 19 charities that benefitted, securing €3.9 million of €6 million paid out in 2012, when the decision to phase it out was announced. In total Rehab received €80million under the scheme.
When Rehab was engulfed in controversy about the role and remuneration of Angela Kerins, its former chief executive, it emerged that Rehab had made profits of only €9,452 on €4 million in scratchcard sales. Rehab said it found it hard to achieve economies of scale with its lottery products.
Last month the organisation announced plans to rebrand, as the word rehab is now largely associated with drug and alcohol rehabilitation. The renaming will also allow Rehab to distance itself further from the Kerins controversy.
