Lottery tender gives Turkish pro-government business a monopoly on lucrative sector

Turkish conglomerate Demirören Group has again won operating rights for a major national betting agency with a winning bid for the Milli Piyango national lottery.

The manner in which the bid was won by Demirören Group, a conglomerate that is one of a select group of companies tightly bound to the ruling Justice and Development Party (AKP), has raised questions.

Last week’s bid from the Sisal-Sans joint venture, a partnership between Demirören Group’s Sans digital and Italian gaming firm Sisal Group, won the consortium a 10-year contract to run the lottery.

The other three firms in the race withdrew their bids after the government, which controls the lottery through the Turkey Wealth Fund state asset management company, upped its demands in a last-minute change to the terms of the tender.

Demirören Group’s consortium was the only firm left to bid for the giant tender, agreeing to provide the wealth fund with a 9.5-percent revenue share of a minimum of 9.32 billion liras ($1.7 billion) income per year from the lottery.

The one-bidder auction recalls the saga that played out last year when the contract to operate Iddaa, Turkey’s only legal sports betting company, went out to tender.

The tender was initially won by Inteltek, a gaming company owned by the Turkish telecoms giant Türkcell. But the contract was cancelled shortly afterwards on the grounds that, since no other company placed a bid in the tender, it contravened rules on fair competition.

The firm that eventually won the contract for Iddaa was none other that Demirören Group, in a consortium with U.S. gambling firm Scientific Games.

When Demirören’s consortium won the rights to operate the betting company in February 2018, one of the conglomerate’s key figures, Yıldırım Demirören, was still the chairman of the Turkish Football Federation. The outrage this conflict of interest provoked forced him to resign from the position.

It did not escape notice, either, that the Demirören Group bought out Turkey’s last quasi-independent mainstream media company, Doğan Media Group, the month after winning the Iddaa tender.

Demirören’s $1 billion purchase of the media group was funded by a loan, on very favourable terms, from the publicly owned Ziraat Bank. The deal placed leading newspaper Hürriyet, television news channel CNN Türk and other large media outlets on the AKP’s side in the run-up to the crucial national elections held in June last year.

It was the cancellation of Inteltek’s winning bid that allowed Demirören the chance to operate Iddaa. Yet there was no mention of any competition rules when the Sisal-Sans conglomerate won the Milli Piyango contract, even though it was the only company to bid.

In fact, the Turkey Wealth Fund’s announcement on the contract simply says the consortium’s was the “best offer”, giving no sign that it was, in fact, the only offer.

With the acquisition of the lottery contract, Demirören has gained a monopoly on betting and games of chance in Turkey, and will operate two of the country’s institutions with the highest profit and least risk until 2030.

Commentators and opposition politicians in Turkey have condemned the move, which they say is another favour to a friendly business whose media wing serves the government’s interests.

Demirören is known to have been struggling under the tough economic conditions brought about by last year’s currency crisis and recession. The main opposition Republic People’s Party spokesman Faik Öztrak said the lottery tender was arranged to throw a bone to the pro-government business in its time of need.

“It seriously makes you think that all of Turkey’s games of chance are now concentrated in the hands of one company. We will carefully examine every detail of this one-participant tender,” Öztrak said.

Even more worryingly, serious questions have been raised over apparent irregularities in lottery draws in recent years.

The winners in national draws frequently come from the same province or district, with some winning cards coming from the same vendor on subsequent draws. The opposition has said this indicates possible manipulation.

But the ruling coalition has voted down motions to investigate claimed irregularities every time opposition politicians have submitted them to parliament.