The government has begun efforts to increase the utility of the 'Lottery Fund' created from revenues generated by lotteries such as Lotto. Under current law, 35% of the Lottery Fund must be distributed unconditionally to 10 institutions, while the remaining 65% is to be used for public utilities. Due to the rigid structure that has persisted for 20 years, there have been ongoing criticisms that money is being allocated to unnecessary places that are not public utilities, prompting the government to actively pursue improvements.
According to the relevant authorities on the 28th, the Ministry of Strategy and Finance's Lottery Commission recently inquired with the Ministry of Government Legislation about the possibility of adjusting the 'total amount (35%)' distribution ratio of the Lottery Fund under current law.
◇ The Ministry of Strategy and Finance asks the Ministry of Government Legislation, “Is it permissible not to adhere to the legal ratio of 35%?”
According to the Lottery and Lottery Fund Act, 35% of the Lottery Fund, excluding prizes and operating expenses from sales, must be legally distributed to 10 institutions such as local governments, the National Sports Promotion Fund, and the Community Chest of Korea, and the ratios are also established by law. For example, 17.267% of the 35% must be distributed to local governments, while 12.583% must go to the Science and Technology Promotion Fund. Additionally, as per the law revised in 2011, it is possible to adjust the distribution ratios of each fund by 'increasing or decreasing' within a range of 20% based on performance.
Citing these two provisions, the inquiry was made to the Ministry of Government Legislation to determine whether all fund ratios could be adjusted to remain below or exceed the total limit ratio of 35%. The Ministry of Strategy and Finance appears to be aiming to reduce the rigid 'legal distribution' ratio in order to allocate more funds to the remaining public utilities.
This ratio was solidified in 2004 when the authority to issue lotteries was centralized under the Ministry of Strategy and Finance's Lottery Commission to compensate for revenue losses of existing lottery issuing organizations. Due to the intertwined interests of several institutions, no one has been able to easily adjust this ratio for 20 years. Therefore, some funds have been allocated to civil complaint projects unrelated to the original purpose of the Lottery Fund, or have been distributed to funds that already have ample resources without specific use. In response, the Ministry of Strategy and Finance is first considering if it can more flexibly dismantle the 35% ratio without amending the law.
The interpretation from the Ministry of Government Legislation was that 'it is currently impossible under existing law.' The Ministry concluded, 'Even if the distribution ratios of each fund are adjusted, the total amount of fund distribution resulting from the adjustments must maintain the 35% threshold.' It further recommended that a legal amendment would be necessary for flexible operations. The Ministry of Government Legislation responded, 'It is necessary to examine policy-wise whether it is needed to adjust the total amount allocated from the lottery revenue, and if so, it should be clearly defined in the legal text.'
◇ The Ministry of Government Legislation recommends a legal amendment… The Ministry of Strategy and Finance notes, “For now, we will induce 'selection and concentration.'”
In response to the interpretation from the Ministry of Government Legislation, the Ministry of Strategy and Finance has decided to consider legislative amendments to adjust the legal distribution ratio. At the same time, it plans to partially reform the fund management method so that the Lottery Fund can be used for more public-oriented projects.
An official from the Ministry of Strategy and Finance said, “We plan to induce 'selection and concentration' by excluding projects that do not align with the purpose of the fund, allowing all to be used for public utilities,” adding, “There are already regulations that permit adjustments, but we are thinking of new ways to adjust more actively even among existing projects.”
As part of this effort, it plans to revise the evaluation criteria for increases and decreases for each fund. This approach will allow for scoring points based on the proportion of brand project groups presented by the Lottery Commission in the Lottery Fund budget, or assigning deduction points if allocated funds are not used for public utilities but instead for excess funds or other resources.
To address the practice of delaying the return of unspent amounts for each fund, it was also decided to strengthen sanctions and management. The specific details of the reform will be announced soon through the Lottery Fund allocation guidelines.
According to the Ministry of Strategy and Finance's Lottery Commission, the expected sales for this year of five types of lottery tickets (a total of 12 types) being handled in the market is 7.6879 trillion won. If a lottery ticket costing 1,000 won is purchased, approximately 410 won will be allocated to the Lottery Fund. The amount allocated for legal distribution projects this year is 1.1051 trillion won.