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Telecom promotions, Games of Chance, Lotto and The Law

Mon, 2 May 2011 Source: Dowuona, Samuel

For years telecom operators in Ghana have been organizing text and win promotions and nobody cared to question why some of them charge premium rates of up to 75Gp per text message for a chance to participate until recently when the National Lotteries Authority decided to use Airtel and Tigo as scapegoats to secure a court precedent.

On March 15, 2011 NLA filed a suit asking the court to, among other things, stop Airtel from going ahead with their “Freedom to Dream” promotion, in which customers are given a chance to win airtime, products and up to GHC25,000 either by recharging GHC2 worth of Airtel credit or spending 50Gp.

The Airtel promotion did not require customers to pay anything for a chance to participate – customers only had to recharge credit for their personal use, or use credit for their personal benefit and yet stand a chance to win prizes.

But in their statement of claim, NLA sought a declaration that ‘the value or the cost of the top-up (GHC2) or airtime (50Gp) required as a precondition to participate in the “Freedom to Dream” promotion represents a consideration (payment) which is required by Airtel to enable qualifying entrants to participate in the draw to win any prize or reward.’

NLA also sued Tigo for their ongoing Tigo House Promotion, in which customers are only required to either register their SIM cards or use selected services on Tigo and stand a chance to win various prizes including three houses in April, May and June.

Again, no charges are involved here and yet NLA hauled Tigo to court and sought to either prohibit them from rewarding their customers for registering their SIM cards and using services on Tigo, or pay some exorbitant amount to NLA based on some Terms of Settlement agreement between the two, which would be discussed in some detail in this article.

One would have thought that the other telecom operators like MTN and Vodafone would have been happy that competition is being whipped, but the previous MTN Ghana Boss, Brett Goschen said, during his exit interaction with journalists, that MTN disagreed with the court decisions against Airtel and Tigo because promotions are meant to reward customers and he did not see anything wrong with the kind of promotions his two competitors were running.

Chief Marketing Officer of Vodafone Ghana, Uche Ofodile also expressed worry about the treatment meted out to Tigo and Airtel, and told this writer that “it is disturbing when you are planning promotions to reward your customers and you see other industry players being hauled to court for running similar promotions.”

Both Brett and Uche thought it would be proper for the Ghana Telecoms Chamber to take the issue up at the group level and join Airtel and Tigo in court to make a strong case against the NLA.

Speaking of the case of the NLA, they also cited the National Communications Authority (NCA) in their suit against Airtel, and asked the courts to enjoin the NCA to design guidelines for marketing promotions of telecom operators.

But the NCA thought that was misplaced because it (the NCA) only regulates the telecom operations and not the games of chance that the operators do.

The NCA argued that games of chance by any individual or organization, other than the NLA, are by law regulated by the Ghana Gaming Commission (GGC), as provided under the Gaming Act, Act 721, 2006, and so it was strange that the NLA pretended they were not aware who was in charge of games of chance in this country and they sought to pin it on the NCA.

By the way several other organizations like the banks, shops, oil marketing companies, insurance companies and supermarkets also organize games of chance – the question is does the NLA go suing the regulators of all these organizations?

But a more thought provoking issue is why in all this hullabaloo about telecom operators running lottery under the guise of marketing promotions, the GGC has kept quiet as if it is not concerned?

The reason that is worrying is the law mandates the GGC to regulate all games of chance organized by any organization or individual in the country, except the NLA and its specific mandate on national lotto.

In fact all the promotions organized by telecom operators, which qualify as games of chance are done with the authorization of the GGC, and the GGC can confirm that the telecom operators and indeed other organizations pay a mandated fee, which is up to five per cent of the total value of the promotion, before they are allowed to run the promotion, provided it qualifies as a game of chance.

To qualify as a game of chance, a promotion should have a premium charge, have a draw, and winning must be by chance – meaning there can be no winners until at the end of the draw.

So the question is why is the GGC silent whiles the NLA takes the telecom operators on, particular those who are running promotions that do not require any participation fee from customers.

Long before NLA ever dreamt of taking Airtel and Tigo to court, it first took the GGC to court in November, 2010 seeking a declaration that GGC’s mandate is limited to the regulation of Casinos and Gaming Machines, and therefore prohibited from authorizing companies to organize other games of chance since the GGC has no Board.

GGC has responded to the NLA claims long ago but the NLA has not bothered to pursue the case for reasons only known to them.

While that case is still pending, NLA managed to get Tigo to sign the said Terms of Settlement, in which Tigo accepted to pay NLA 30 per cent of the value of every promotion they (Tigo) runs, instead of paying five per cent to the GGC.

It beats one’s mind why the lawyers of Tigo would subscribe to such a deal without consulting the GGC, which have been authorizing their promotions all these years..

As we speak Tigo is coughing a whopping GHC300,000 (Three billion cedis) to the NLA as 30 per cent of the value of their ongoing Tigo House Promotion. It was not difficult for the court to get Tigo to pay that money because that agreement their lawyers signed with the NLA was like a guilty plea in court, so the court just passed judgement on their own plea, even though in this case Tigo’s promotion does not involve premiums rates.

It is not surprising that those lawyers of Tigo who led the company into that agreement are no more with the company. Whether they were kicked out or they resigned on their own, that is left for Tigo to tell.

The NLA tried to get the GGC to be party to the Terms of Settlement but the GGC refused to sign because, according to sources at the GGC, the deal did not agree with the spirit and letter of the Act 721, which mandates GGC to regulate all games of chance apart from National Lotto.

But why is the NLA not pursuing the court case against the GGC but rather chasing telecom operators around?

First of all, it is important to note that there is a separate Gaming Act, Act 721, 2006 from National Lotto Act, Act 722, 2006.

To clearly distinguish between National Lotto and all other games of chance, the Gaming Act clearly states in its Section 1 that the Act does not apply to National Lotto.

Section 2 of the Gaming Act establishes the Gaming Commission and Section 3(1) states, categorically that the object of the Gaming Commission is to regulate, control, monitor and supervise the operations of GAMES OF CHANCE in the country (of course excluding national lotto).

Section 3(2b) also states clearly that the Gaming Commission also has the mandate to license COMPANIES that want to operate casinos and ANY OTHER GAME OF CHANCE.

Then Section 72, which interprets the key words in the entire Act 721 defined game of chance to include a game OTHER THAN LOTTO in which participants, in anticipation of winning a reward on the results of the game which depend on luck and which cannot be determined before the end of the game, PAY MONEY FOR THE RIGHT TO PARTICIPATE.

In both the Airtel and Tigo cases, customers are not paying money for the chance to participate in the games – they are required to use services and in fact spend their money/credit for their own benefit, unlike in previous cases (MTN and Tigo) when customers actually spent between 50Gp and 75Gp on text messages for a chance to participate.

This was the reason the GGC passed Airtel’s “Freedom to Dream” as not qualified to be considered as a game of chance so Airtel was free to organize it without paying anything to the GGC.

It is important to note that lotto is also a game of chance but not all games of chance are lotto.

So what does the National Lotto Act say, and on what legal grounds, as per the Act, did NLA take Airtel and Tigo to court? That question can only be answered by the law courts, but it does not preclude a factual presentation of the separate mandates of NLA and GGC vis-à-vis games of chance.

Section 2(1 and 2) of the National Lotto Act, Act 722, 2006 establishes the NLA as the only institution mandated to conduct National Lotto to generate revenue for national development.

Section 2(4) allows NLA to OPERATE (not regulate) other games of chance on its own or in partnership with individuals, societies, associations and corporate bodies at its own risk, with not state responsibility.

But there was a very important condition in Section 2(4) which requires NLA to operate other games of chance outside lotto only in accordance with EXISTING LAWS, in this case the Gaming Act, Act 721, 2006, which also mandates GGC to regulate all games of chance.

Then Section 4 (1 and 2) prohibits all other persons and organizations from operating lottery apart from the NLA, and provides sanctions for persons/organization which contravene the prohibition.

But Section 56, which interprets key operational words in the Act, defined lotto as “a scheme for the distribution of prizes by lot or chance especially a gaming scheme in which one or more tickets bearing particularly numbers draw prizes and the rest of the tickets are blanks.”

The question one may ask is whether the telecom marketing promotions involve number-bearing tickets that draw prizes – or is it the case that the NLA is treating the phone numbers of telecom subscribers as number bearing tickets for which the draw done with the phone numbers then become lotto?

These are thorny questions that can only be answered by the courts.

Meanwhile the case between NLA and the Gaming Commission is still pending, but the determination of that case is more likely to have greater implication for the confusion over whether all telecom rewards promotions are necessarily games of chance or lotto or both.

It would also settle the confusion about whether the GGC’s mandate is indeed limited to Casinos and Gaming Machines, and whether the NLA really does have the authority to control, regulate, monitor and supervise the games of chance organized by telecom operators and other organizations like the banks, insurance companies, supermarkets and others.

It would also have implications for Tigo – whether they are stuck in that Terms of Settlement with the NLA or they can opt out. We can only wait and see.

Feature by: Samuel Dowuona

Columnist: Dowuona, Samuel