FRANCHISING SERIES: Starting a Lotto Outlet
Everything about the location will be left to the responsibility of the applicant, including costs for rent, lease, construction, installation of electrical lines, phone lines, security features and all other connections. This means that applicants must know the best place to put a lotto outlet aside from complying with location requirements set by PCSO.
An ideal site is somewhere with few existing lotto outlets, highly accessible and preferably crowded. Some existing agents have placed their outlets near markets, inside malls, near residential areas, near establishments that draw many customers like restaurants, gas stations and others.
Here are PCSO’s requirements for location:
- Minimum distance from another outlet should be 50m
- Minimum distance from elementary and secondary schools should be 100m
- Floor space should be at least 2m by 2m
- Business counters should measure at least 36in by 24in
- Floor space must be dry, ventilated (preferably air conditioned) and should not be prone to floods
- Must have at least one fixed landline for hotline use
- Must face the direction of human traffic or major traffic flow
- Regular power supply of 220VAC
- Available space for terminal installation, modem and lottery paraphernalia like shelves, counters and cabinets
For documentation purposes, the applicant must also submit these information regarding the location:
- Sketch or map of the site showing location of existing lotto outlets in the area
- Pictures of the proposed site and its vicinity
- Proof of ownership of the site
- For owner: Include land title
- For lessee: Include a notarised certification from the building owner
Because PCSO outlets can earn a lot of money overnight, the establishment must be highly secure. In addition to the location requirements, the entrepreneurs must be ready to remodel the chosen establishment to meet PCSO specifications on security, which includes:
- Outlets must be enclosed
- Outlets in commercial areas with 24-hour security need not be enclosed
Bullet-proof glass fronts are recommended to provide greater security. Having CCTV security cameras are not required, but may be additionally installed by the applicant him or herself to better monitor suspicious activities and in case of criminal attempts.
A lotto outlet must have at least one dedicated personnel who will handle all transactions in a terminal. If the outlet has more than one terminal, then each terminal should have one personnel. PCSO also recommends having one back-up personnel per terminal in case of emergencies.
PCSO offers training for all the agents’ operators. The operating hours of a lotto outlet, which runs from 7am to 8:30pm for seven days a week, must be strictly followed by the agent.
Preparation of the location could take around Php30,000 to Php50,000 depending on how much renovation is needed on the site. Cost of buying the establishment varies, but may hit somewhere around Php500,000 since the ideal sites have to be located in highly accessible, commercial areas. Looking into the option of renting rather than buying is a better option especially for first time entrepreneurs.
Aside from the application fee of Php2,500, the applicant must be ready to pay Php10,000 installation fee to the PCSO Treasury Office or Cashier within 30 days of receiving an approval. Within that period, the approved applicant must also post a cash bond of Php300,000 or submit a surety bond that covers the amount of Php700,000.
The overhead expenses highly depend on the number of terminals being used at a time and size of the outlet. Apart from the electricity bills, there’s also the salary of the operators to consider. If the owner of the outlet is renting the establishment, then that should be included in the operating costs.
Fortunately, the owner need not think about tickets, terminal hardware and software, printed materials and other materials since PCSO will provide all these for free.
Here is a sample breakdown of possible expenses on a daily basis:
A PCSO outlet sells many products, including a number of lottery games, scratch-it cards and Keno. The profitability of an outlet depends on the number of products or types of tickets available for sale. Here are the ticket prices of some of the common games in PCSO:
- Php10–20 per ticket for 6-digit games like Grand Lotto, Super Lotto and Power Lotto
- Php10 per ticket for 2 to 3-digit games like EZ Lotto and Swertes 3
- Php10-27,000 per payslip for Keno
The agent profits from an outlet by earning a percentage of the gross sales of a product, usually 4.5 to 5%. The more tickets sold, the higher the profits. In addition, if an outlet owner holds a winning ticket, then the owner will be given a percentage of the winning ticket, which can reach up to Php500,000.