IN EGYPT, THE WORD ‘lottery’ is synonymous with ‘compulsive gambling,’ bringing up memories of the graying, disheveled James Caan in The Gambler, risking his last crumpled dollar on a hunch — the same hunch he’s had for the last 20 years — that this time, he’ll hit the jackpot.

When word spread that the Egyptian Postal Authority (EPA) struck a joint-venture deal with Intralot, a Greek company, feelings were mixed. On its homepage, Intralot brands itself as “a leading global supplier of integrated gaming and transaction processing systems,” which develops innovative game content and value-added services to state-licensed gaming organizations worldwide.

How is this linked with the EPA? A talk with Ali El-Moselhi, the respected head of EPA, puts everything into perspective. It’s not quite a national lottery — yet.

“One of our main strengths is our 3,400 points of sale, which means that we’re virtually everywhere,” El-Moselhi explains. “Our deal with Intralot will allow us to work in the field of sports, either in reservation, distribution, entertainment or the slew of value-added services related to the various games, like managing events and tournaments and organizing activities.”

One of the biggest game network companies in Europe, Intralot organized gambling at the Athens Olympics and is currently ranked third on revenues and second on profits among lottery suppliers worldwide.

Intralot approached Egypt Post with plans to establish a new joint-venture company by January. Intralot Egypt will own 85 percent of the shares and Egypt Post 15 percent. According to an Intralot statement, the project is concerned with the development and management of an integrated system connecting all of Egypt Post’s branches to enhance the way they conduct financial transactions such as payment of utility, taxes, credit card bills and ticket booking. Intralot will install an online central system, based on the LOTOS platform, which will include the management software, the telecommunications network and the terminals in all Egypt Post’s branches and related points of sale, which the new company aims at expanding to 10,000.

El-Moselhi expects the 40 million partnership to turn a profit from the first year.

But it’s Intralot’s expertise in the design, development, operation and support of custom-made gaming solutions, including numerical, video and sports lotteries, as well as fixed-odds betting, pari-mutual wagering — a form of betting on the outcome of an event in which all wagers are pooled and held by an association for distribution of the total amount, minus the deductions authorized by law, to holders of winning tickets — and instant lottery games that reveal the EPA’s eventual plans for a national lottery.

The EPA project also explains the missing link in the sports-betting controversy covered by Egypt Today (July 2005): The Ministry of Youth refused to divulge the identity of the foreign investor it had recruited to allow legalized betting on football matches and other sports games.

“Our agreement was reached with the blessing of the Ministry of Youth and in cooperation with the [football] clubs,” says El-Moselhi. “Yet, only when we have the full network and infrastructure in place will we start thinking about games, results predictions or sports betting.”

He adds that the same applies to plans for a national lottery which again he views as a valid financial resource to meet urgent social demands: “This is a means of developing a community partnership with the government.”

As for the religious controversy over the definition of sports betting or the lottery as a form of gambling, El-Moselhi sees the matter in a different light.

“This is not gambling,” he claims, “Participants know the results of the game in advance and it is legitimate to be rewarded for such knowledge. How different are the 900-number question-answer competitions from sports predictions? What about all the TV shows where the winners are randomly selected?”

El-Moselhi adds that religious views are highly respected and that lotteries are not simply imported cultural practices that are not suitable for us. “But technology now allows us to develop and meet our needs without straying from our culture. We must not fear these new ways of sourcing.”

Yet there is an overwhelming perception that sports betting and lottery indirectly target and exploit lower-income brackets, manipulating their consumerist aspirations to their own detriment and for the benefit of faceless, multinational networks. El-Moselhi says the new consumer rights laws, NGOs and civil society watchdogs can help avoid that by monitoring and counteracting socially harmful activities.

“By doing so,” he concludes, “Egypt will develop on all fronts. Fear is a defeatist attitude, yet by taking steps to enhance the entire mechanism, the whole country will gain and we will create an effective civil society and a customer community. We’ll also have a proper debate and a genuine struggle to make the best of the resources available. We must always consider alternatives.

“Today people can partner in the international lottery through the internet, so what are we trying to protect? The rules of yesterday cannot govern today or the future. We must open our minds, think, preserve our culture, address challenges and, at the end, come up with a compromise without losing our identity. I never judge anything in advance. Let’s just wait and see.”

El-Moselhi explains that the agreement with Intralot crowns a complete overhaul of EPA, which started in mid-2003, less than a year after he took the helm. He outlines the transformation of Egypt Post as taking place in five main areas. The Intralot agreement is part of the fifth area of development — the introduction of value-added services.

The first improvements concerned EPA’s physical network, which gave birth to a new image for post offices and the new Egypt Post logo. This phase also included setting up the backbone of communication infrastructure without which it would have been impossible to add new services or enhance existing ones. An IT infrastructure, concerned with current or savings account systems and direct money transfers, was also implemented.

“Financial services in Egypt Post represent about 60 percent, while postal services stand for 40 percent, from the revenue point of view. Even though postal services are huge, the prices are determined by the government so we are working under cost,” says El-Moselhi. In order to decrease the postal services’ deficit, it becomes necessary to enhance the financial services since people will not easily accept to pay more for postal products.

The second crucial area has been in human resource development, where massive training in basic customer service and computer skills has so far been given to 7,500 employees (out of a total 45,000), in collaboration with the Ministry of Communication and Information Technology and universities across the country. This is linked to the third development area, dealing with the enhancement of existing services, whether classical postal services, parcels or postal bank accounts.

“These services suffered from a lot of bureaucracy and so we simplified the process and redesigned it, shifting our focus to become customer-oriented as opposed to back-office oriented,” says El-Moselhi.

He illustrates the change with an example: In the past, it took 21 days to replace a lost savings book, while now the customer gets an immediate replacement and back-office requirements are attended to in due course. Money transfer services inside Egypt have also become immediate and letter and parcel delivery has been organized to guarantee a maximum delivery time of seven days inside Egypt.

“Before, the average delivery time was random. A letter mailed to an address in Cairo could have taken two days or 21 days. There was no system,” he says. The EPA has also introduced parcel home delivery and pick-up services: El-Moselhi says parcels are the postal service of the future, since there is an international annual five percent decrease in letters being mailed because of strides in communication technology.

The fourth area of development involves introducing new services, such as the tracking of international deliveries in collaboration with FedEx. In terms of financial services, continues El-Moselhi, EPA was the pioneer in introducing the check-enabled current account with daily profit, which is a joint project with Banque Misr. Through an agreement with the National Bank of Egypt, a bourse savings book was also recently introduced: A client may open it with a minimum of LE 10 and save himself the hassle of finding a broker and observing the market. The EPA would buy the shares on his behalf and each week the return on these shares will be announced. The client, as a partner in this process, is entitled to his money, interest and profit.

“Not only will this shore up the bourse, but it will also increase the investment attitude of the public, encouraging people not just to rely on fixed bank interest rates,” says El-Moselhi.

An Islamic Fund management service in collaboration with Faisal Islamic Bank is also now available.

The latest product is the Giro account, the result of an agreement with Banque Misr and CIB. “Giro is an Italian word meaning circulation. It is a system allowing automated, paper-based bill processing, where clients may choose to have the value of their telephone bill, for example, automatically debited from their bank or postal account,” explains El-Moselhi, highlighting that one of the main advantages of applying such a system is that it will minimize the cash-handling process.

At the moment, 97 percent of payments made by Egyptians are cash, whereas in fully developed economies that figure stands at only 10 percent. The introduction of automated bill processing will enhance the whole economic condition of the country, El-Moselhi explains, because the money will remain and circulate inside the various institutions. et