NBI bares procedural lapses in small-town lottery operations

The National Bureau of Investigation (NBI) on Wednesday bared procedural lapses in the operations of small-town lottery (STL) in seven provinces.

During the House of Representatives games and amusements committee hearing, special investigator Ferdinand Manuel told members that a team raided STL offices in Bulacan, Zambales, Olongapo, Laguna, Batangas, Nueva Ecija and Quezon, and found several procedural lapses.

STL outlets have been suspected of being a front for illegal gambling. Ironically, the Philippine Charity Sweepstakes Office (PCSO) started STL in 1987 to stamp out “jueteng,” an illegal numbers racket. Both involved betting on two-number combinations.

Manuel said some STL outlets do not use the point of sales terminals, a machine used to place bets and to forward the receipts to a central database for sales reporting.

Manuel said the absence of sales terminals allow STL operators to underreport their sales.

He added that instead of using the terminals to collect bets, some STL operators allowed the use of papelitos, or small sheets of paper, for betting instead of PCSO-printed tickets, in violation of the implementing rules and regulations governing the STL.

Employees in the STL outlets were not wearing the proper uniform and identification, Manuel said.

The STL outlets were also not registered with the PCSO as satellite offices.

Manuel cited an STL outlet in Nueva Ecija where the manager doesn’t even have a masterlist of employees. There were also minor bettors in the Nueva Ecija STL outlet.

Manuel said the NBI report did not indicate there was fraud in the STL operations.

He said he was surprised to have read a report from the Philippine Daily Inquirer that at least P50 billion in undeclared sales were defrauded from government by STL operators suspected of under-declaring sales to government.

‘Staggering’ difference

Manila Rep. Amado Bagatsing noted that there was a difference between the NBI report presented and the newspaper report.

“Napaka-staggering naman ‘yung nasa front page ng dyaryo; nawalan ang gobyero ng P50 billion. After hearing the NBI, wala naman akong nakitang naka-establish na may fraud. Ang nakikita ko, yung procedural. Paano nagtutugma ang fraud at yung inyong report? Wala naman akong nakikita sa inyong pagsusuri na katarantaduhan,” Bagatsing said.

“We deny any knowledge. We were surprised to have read that,” Manuel said.

The Inquirer cited a portion of the NBI report which said the absence of terminals may allow STL operators to defraud government in sales.

“With this type of setup, it is highly improbable for the PCSO to determine the actual amount of sales per draw, per day, per week and per month being generated from the STL games,” the NBI said.

“This could hinder proper recording and auditing, which may be used to defraud the government and avoid the payment of taxes, fees and remittances should there be misdeclaration of actual sales,” it added.

The Inquirer quoted PCSO Chair Erineo “Ayong” Maliksi, who said he had asked the agency to investigate STL operations following reports that some STL operators were using their licenses to conduct jueteng operations and not declaring actual sales to the PCSO.

“Approximated income from STL alone is P50 billion per annum nationwide, but the average income being declared by the STL operators in the past years is only around P4.7 billion,” Maliksi said.

He added that “based on the Gaming Product Development and Marketing Sector of the PCSO, the potential income of all illegal games, including the illegal declaration from STL, could be approximately P100 billion a year.”