The report in the Sydney Morning Herald yesterday about the District Court case commenced by NSW Lotteries against a newsagent demands careful attention from newsagents.
It highlights the risks newsagents face in managing payouts, regardless of whether NSW Lotteries, or the lotteries operator in any other state, has robust procedures. Consider this from the SMH report:
Mr Bannon claimed that the newsagency was in breach of its contract with NSW Lotteries and therefore the lottery company should be indemnified against the loss.
I would have liked the SMH to explore this further and report on why NSW Lotteries considers the newsagent to be in breach and what the implications of such a breach could be for the newsagent if proved.
My understanding is that if such a breach is proved, the insurance coverage NSW Lotteries requires lottery agents to have could be considered void by the insurance company, leaving the small business operator to carry the cost of the fraud – unless their general business policy offers relief for the employee fraud they appear to have been victim of.
I am shocked that NSW Lotteries had a system in place which allowed newsagents to manage a first division prize claim. To blame the newsagent for a breach of contract, over a process which should never have been handled at the store level in the first place is nonsense. NSW Lotteries have acknowledged issues with the old process by making changes.
The case this week in the District Court is not the only matter involving major NSW Lotteries prizes, newsagents and the issue of breach of contract. Of course, Lotteries is safe if they can prove the breach in other cases. That only leaves the insurance company to void the policies – because of the breach – to protect their bank balance. Newsagents face the biggest risk in these cases and that’s the story I would like the SMH and others to cover.
Newsagent associations ought to be all over this case. I suspect that when they do become involved it will be too late for some of their members.
UPDATE: Today’s SMH has this story including this from the newsagent’s lawyer:
“The [newsagents] have been betrayed by a person they had no reason to doubt. They now find themselves in the position of being sued for half a million dollars plus costs by an agency of the government,” Mr Stevenson said.
As I suggested earlier in this post – watch for more cases on State Government owned NSW Lotteries suing newsagents.