Lottery scratch card sales of €4 million by the charity Rehab generated profits of less than €10,000 in one year, the Dáil has heard.

In 2010 the cost of generating sales at Rehab represented a "significant percentage of overall sales revenue, leading to a low profit margin," Minister for Justice Alan Shatter said. Scratch card sales of €3,969,000 gave profits of only €9,452 and bingo sales of €3.19 million resulted in profits of just €548,000. "Figures supplied by Rehab Lotteries show their gross lottery sales of almost €7.2 million resulted in a net profit of €558,000 or 8 per cent," he said.

When he met Rehab he noted the profits ratio "seemed disproportionate" and he expressed concern at the approach being taken to public fundraising, he said.

No incentive
Mr Shatter said charities that operated a lottery and received money from the Charitable Lotteries scheme out of National Lottery funds had "no incentive" to keep down operating costs. The scheme "incentivised charities to leverage public funds, payable under the scheme by maximising their gross ticket sales with no regard to either operating costs" or how much of the money goes to charitable purposes.

The Minister was speaking during debate on a Sinn Féin private member’s motion which introduced a Bill providing for the full enactment of the 2009 Charities Act and the addition of the advancement of human rights on to the definition of charities.

“This should never have been left out in 2009 and is a serious omission,” Sinn Féin justice spokesman Pádraig Mac Lochlainn said. In other jurisdictions it is widely accepted that the advancement of human rights is a charitable purpose, he said.

The original purpose of the 2009 Charities Act was to reform the law relating to charities, to ensure greater accountability, offer protections against fraud and to enhance public trust and confidence in charities and to increase transparency in the sector. It provided for a new charities regulation infrastructure including a charities regulator, a register of charities, consultative panels to advise the regulator and a charities appeals tribunal.

“Since the foundation of the State, charities have been unregulated. The effect of this is that it is now doing untold damage both to the charities themselves but more importantly to the vulnerable people who depend on them.”

Earlier, Mr Shatter said legal action by the Rehab Group and Rehab Lotteries against the State was "likely to exert a significant burden on either public resources or charity resources or both." He said he had decided to wind up the Charitable Lotteries Scheme because it had evolved into a mechanism to obtain taxpayers' and National Lottery surplus funds.

Judicial Review
That decision is the subject of Judicial Review proceedings by Rehab Group and Rehab Lotteries and a judgment is awaited.

Mr Shatter said the group was taking separate litigation against the State claiming damages of €1.5 billion in connection with the operation of the national lottery. Mr Shatter did not wish to make comment that might prejudice the outcome of proceeding before the courts.