PETALING JAYA: While 4D lottery prize payouts remain unchanged for now, number forecast operators (NFOs) are said to be lobbying for it to be reduced.

Industry sources said three NFO operators are in the midst of lobbying the Finance Ministry to reduce the 4D first prize payouts by RM200. This would bring the current payout ratio for every RM1 bet to RM2,300 for the first prize of “4D Big” and RM3,300 for “4D Small”. NFOs presently pay out RM2,500 and RM3,500 for those bets, respectively.

Currently, there are three main NFOs in the market – Berjaya Sports Toto Bhd (BToto), Multi-Purpose Holdings Bhd and Tanjong plc.

The NFOs have yet to submit their proposal to the Government on the prize reduction but was in the process of doing do, according to sources.

Sources said the proposal was only for 4D lottery games.

It is understood that the rationale for this move is that the NFOs want to preserve its profit margins as the Government had recently increased the pool betting duty to 8% of net revenue from 6% previously.

An analyst explained that there were 23 sets of winning 4D numbers in a single NFO draw, adding that the total payout for a draw would be RM6,600, based on 10,000 RM1 bets, indicating the kind of profit margins that NFOs earn.

Despite the possibility of lower sales if payouts are reduced, analysts said NFOs would still remain attractive due to their huge cash flows and absence of bad debts.

However, one analyst pointed out the possibility that if prizes were reduced, customers could opt for unlicensed offereings that maintain the old payout ratio.

“Lower payouts could make licensed games less attractive when compared with unlicensed offerings,” he said.

Meanwhile ECM Libra Investment Reserch said that if 4D first prize payouts were reduced by RM200, this would increase BToto’s earnings by 10% and 5% for Tanjong annually.

However another analyst said the proposed reduction in prize payouts would not have much effect on the earnings of NFO players.

“A lower prize pool could adversely affect NFOs’ topline. That could erase the positive effects of a margin increase,” he said