Who wins the underground lottery?

21 June 1998

It looks like any other petty grocer’s shop on a dusty provincial side-street. But today it is a financial hub. Jae Fai’s turnover will be half a million baht. All day people come to her back room with lists of names and stacks of small-denomination baht notes. Today is lottery day.

Jae Fai’s grocer shop is a small cog in one of Thailand’s largest businesses: the huay tai din or "underground lottery".

The business is so large because everyone plays. The network of lottery agents like Jae Fai reaches into every province, every town, every street, every office. Thousands of people help to collect bets and pass them up the line.

Jae Fai has cultivated a regular clientele who play the huay two or three times a month. Some trek in many kilometres from remote villages, bringing lists of bets from their neighbours. Almost every village household places a bet, ranging from 5 to 3,000 baht and averaging around 100 baht. Among town people, over three-quarters play the huay for an average stake around 200 baht.

The huay is hope. Often it is the poorest, those most dependent on hope, who bet the most. Among the garbage scavengers in one provincial town, every household plays the huay for an average bet of 150 baht.

But this hope is expensive. Most organised gambling is a mug’s game because the odds are stacked against the punter. The huay is no exception. Only about 60 percent of the money staked is returned in prizes. Over the long term, the punter loses 40 percent.

But the huay is still popular. Bets are placed on the last 2 or last 3 digits of the government lottery draw. This system delivers many more small winners than the government lottery. Most people know someone who has won at least a little bit from the huay. This knowledge sustains hope.

Most months have three draws - two on the regular government lottery, and another on some special event. Recently, there is new game, the huay hun or stock market lottery. Punters bet on the last two figures of the Stock Exchange index at the close of each session. That means twice a day.

There is nothing really "underground" about this lottery at all. Everybody knows about it. Everybody plays it. Everyone in this town knows what Jae Fai does for a living (her grocery store is not a serious enterprise). At the newsstand, you can buy magazines for huay players. They carry stories about winners, tips on "good" numbers, ads by clairvoyants selling predictions, and letters from disappointed punters.

But this lottery is called ‘underground’ for one reason: it is totally illegal.

Last year, Thai Farmers Bank estimated that the turnover of the huay is around 100 billion baht a year. Recent research in Chulalongkorn University suggests that figure is about right. It’s an awful lot of money - roughly equal to the total value of rice exports, or the total military budget. It amounts to one-fortieth of the entire Thai economy.

Where is all this cash going? Who are the winners from the huay?

Around 10-20 billion is probably used to keep the system going. Partly that means providing a cut for people like Jae Fai who recruit the punters. Partly it means paying off the police and anyone else who might interfere.

For Jae Fai the huay is a nice steady business. She makes 30-60,000 baht a month for acting as an agent. She has bought a pick-up truck and 20 rai of land. She now sends her niece to school in Bangkok. She does not pay much attention to the grocery shop.

For the police, too, the huay is a nice steady earner. Some 20 officers call at Jae Fai’s shop on a regular basis. She gives them 20-50 baht each time. Further up the line, some bigger policemen get paid rather more.

But the big winners are the lottery bosses. Most of these run the huay of a single province. Some have a smaller area, and a few span several provinces. Their take is probably around 5-30 million baht per boss per month.

Profits of this size point to one thing: politics. The huay provides the funding needed for the vote-buying customs of provincial politics. In return, politicians provide the protection which the huay needs. Many sitting MPs are rumoured to be huay bosses. Many others look to the huay bosses for support, as financiers and as election canvassers. The huay has expanded in the last decade along with the growth of electoral politics. It is only a small exaggeration to say that our parliament floats on the profits of this illegal gambling.

In effect, the huay provides a way for big people to "tax" little people to build their fortunes and pay for their political careers. The huay helps to decide what sort of people we get as law-makers. Doing something about the huay could be as important a part of political reform as amending Clause 211.

But the huay is also a great opportunity. Suppose the money could be diverted to other uses. Suppose the profits were used to fund local government investment in infrastructure and development schemes. Suppose they were diverted to forced savings schemes which reduce the national savings deficit and improve social security.

The Chairman of the Government Lottery supports the idea of regularising the huay. So too does Jae Fai. She would rather pay taxes to the government than pay-offs to the police.

The problem is: how can this be achieved? Our law-makers will not be keen to destroy their own fund-raising system.

Suppressing the huay is probably impossible. Bringing it under government management will be difficult. But leaving it unchanged and levying a tax should be possible. The proceeds could finance some of the improvement in life which the punters hope for.

Chang Noi says: regularise the huay, so we can use the revenues for development.