Representative: I don't know why we are using, it costs 159 NIS a month.
Researcher: But how much of that money goes to the purchase of forms?
Representative: I don't know, I'm not going in, it's a company, we have bookkeeping here, they do the math.
And later in that conversation:
Investigative Reporter: Like what do you get out of it? Do you understand? It's like not all the money goes to the card. Heaven forbid, don't you, understand?
Representative: First of all, what do we get out, if you noticed in the lottery we get 10% of the
Researcher: From winning. That's right.
Representative: So it can, as far as it comes out and everything, and everything is around, I don't know what the costs are. But overall, if we, it's a company, then I believe we have a profit here.
- Thus, the Respondent's representative is explicitly asked how much of the subscription fee is used for the purchase of lottery tickets and does not provide a concrete answer. Subsequently, the Respondent's representative refers to the fact that in the event of winning the lottery, the Respondent enjoys 10% of the winning money, but does not clearly indicate whether there is an additional fee charged from the subscription fees themselves.
- In his interrogation of the transcript of this conversation, the declarant on behalf of Respondent 1, Mr. Micha Sarig, confirmed that as far as he was concerned, this was a satisfactory answer (p. 78 of the transcript, lines 34-35):
- As far as you are concerned, there is no problem for a customer who asks such a question to get such an answer.
- I think there is indeed no problem with that.
- It appears from this that respondent 1 does not disclose to its customers the amount of the subscription fee used to purchase lottery tickets and how much of the subscription fee is in fact paid as a commission to the respondent, even when it is explicitly asked about it. This is when, as it has emerged, a significant portion of the subscription fee, to say the least, is actually used for the purchase of lottery tickets.
- This figure was provided in a letter provided by respondent 1's accountant as part of the proceeding, in which he was asked to verify the information provided to him by the respondent regarding the direct portion of the subscription fee used to purchase lottery tickets. The letter showed that the direct portion of the subscription fee used for the purchase of lottery tickets is between 24.6% and 26%, depending on the route. These calculations, the accountant noted, do not include "all the other costs of gifts, shortages in groups (perfected by the company) and the direct overheads with the customer, as well as the portion of the costs and indirect overheads." The accountant also noted that "in practice, the costs of sending the lottery in a monthly summary to the company constitute an average of 34%, and this is due to the gifts in the lotteries that customers receive all the time."
- Thus, in the case of Respondent 1, most of the subscription fees are not used for the purchase of lottery tickets, nor for other prizes given to subscribers. This figure is not presented to the customer.
Respondent 2 - Mega
- Respondent 2 proposes three tracks for group participation in the lottery lotteries, according to what is displayed on the Respondent's website and as attached to the request for approval. Regarding each detailed track, how many lottery tables it includes, how many lotteries the subscriber participates in a month, and what is the size of the group of participants who share the prize equally. It is also noted that the track includes the service of sending tables, checking winnings, collecting the prize in the event of a winning, and transferring it to the winning customers. Each track carries a price tag of between NIS 199 and NIS 799 per month, with a note next to it of the cost of purchasing the package at the booth at the National Lottery. For example, the "Arad – Basic Package" track, which costs the customer NIS 199 per month, includes 100 lottery tables for participation in 9 lotteries per month, in a group of 200 members in total. It is noted that the cost of purchasing this package at Mifal Hapayis is 2,770 NIS.
- In addition, the Mega Lottery's bylaws, which were also attached to the application for approval, state, among other things, that the company is entitled to 10% of the profits in the event of a group winning the lottery.
- The rate of the subscription fee used to purchase lottery tickets is not stated on the Respondent's website or in its bylaws.
- According to data provided by Respondent No. 2's accountant in the framework of the proceeding, the cost of purchasing lottery tickets out of total receipts from customers was about 18% in 2020 and about 23% in 2021. Here, too, it was noted that these rates do not include ancillary costs that embody the service provided by the Respondent to its customers in handling the filling out of the forms, sending them, etc.
- It therefore appears that even in the case of Respondent No. 2, a significant majority of the subscription fees are not used for the purchase of lottery tickets, and even in her case, this figure is not presented to the customer.
Respondent 5 - Club for You
- Respondent 5 offers its customers two participation tracks. The first track consists of a mix of several types of tickets. The customer receives a personal participation ticket in each lottery lottery; seven lottery tickets that he distributes in a group of 7 participants, in each lottery lottery; and 90 lottery tickets, which he distributes in a group of 560 participants, in each lottery lottery. In the framework of the second track, the customer receives one personal participation card in each lottery lottery and 90 lottery tickets that he distributes in a group of 560 participants, in each lottery lottery. Here, too, it is stated in the framework of the two tracks that in the event of a winning, the Respondent is entitled to 10% of the prize.
- Both tracks are marketed at different price levels. The first track is marketed at prices of NIS 139, NIS 179 and NIS 229, and the second track is marketed at prices of NIS 79 and NIS 99. In his interrogation, the declarant on behalf of the respondent, Mr. Snir Chen, clarified when asked about the different prices at which the first track is marketed, that the difference between the different prices stems from the fact that the respondent usually distributes gift vouchers to its customers in different amounts, and that gift vouchers are distributed differently among subscribers who have paid different subscription fees. The number of lottery tickets that the customer receives is the same in each price bracket.
- According to data provided by the respondent's accountants, the proportion of the amount used to purchase lottery tickets out of the subscription fee is between about 22% and about 37%. Thus, in the first track, whose price ranges from NIS 139 to NIS 229, only NIS 51.84 of the subscription fee is used to purchase lottery tickets. In the second track, whose price ranges from NIS 79 to NIS 99, only NIS 27.84 of the subscription fee is used to purchase lottery tickets. The accountants also note that the company has additional expenses in the process.
- In this case, too, the vast majority of the subscription fees are not used to purchase lottery tickets.
- For the sake of completeness, it should be noted that although the Respondent 5's bylaws do not include a reference to the rate of the subscription fee used for the purchase of lottery tickets, in a conversation that took place between an investigative reporter on behalf of the Applicant and the Respondent's representative, it was stated that the Respondent charges a service fee of NIS 79 per month:
"The respondent's representative: [...] We charge a service fee of NIS 79 for filling out for you, sending, checking informing you of the winnings and actually integrating you into the methods, whether it is in some of the individual columns, some of the group columns depend on how much you want to invest, there are 27 different tracks here.