# Prize Bonds Draw Supervision



## johnny2shoes (25 Aug 2010)

Hi,
I'm a newbie.  Perhaps somebody can show here the honesty of the 
prize bonds draw each month.

(1) Are these draws supervised by reliable independent  people?
(2) Is there a statutory requirement to have these draws supervised by independent people?
(3) Is it possible for An Post employees and Fexco people to rig these draws?

To put it simply, in this day and age of bent authority I just dont trust anybody.   
Thanks in advance


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## Mpsox (25 Aug 2010)

Prize bonds are governed by the Prize bonds regulations and fall under the governance of the NTMA, as it is a government savings scheme. There is an indepdent external audit done annually by KPMG.


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## dereko1969 (25 Aug 2010)

not everything has to be a conspiracy!


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## Markjbloggs (25 Aug 2010)

dereko1969 said:


> not everything has to be a conspiracy!



No, but this is Ireland after all.  And I'm sure Anglo was audited annually too.  

OP, do you have specific reason for your suspicion?


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## johnny2shoes (25 Aug 2010)

I'm accepting there is an annual audit etc. but my original question remains unanswered.
Put it another way..........is each monthly draw supervised by outside independent people?.  
As Markjbloggs so rightly points out, Anglo was audited annually too.


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## JoeB (25 Aug 2010)

I think you're right to be suspicious.

The draws are done by computer as far as I know. There doesn't seem to be any detail at all on how they're done, or if they're fair.

The National Lottery is done in public, with an independent adjudcator at each draw. An audit once a year is hardly as good as that. Would people play the Lotto if the draws were secret and the process itself was also secretive?


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## johnny2shoes (25 Aug 2010)

Test


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## johnny2shoes (25 Aug 2010)

Ok, the test worked, so here goes.

Thanks for that reply Joe.
I wonder is John Citizen entitled to witness one of these draws, even 
by appointment?


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## JoeB (26 Aug 2010)

To be honest I'd imagine the draws are fair. But I think they're doneby computer and it's possible that there's errors in that process... like the E-Voting machines,.. can the software be trusted?

The old Irish Sweepstakes, and the Lotto, understand the importance of the draws being seen to be fair... this seems to be in contrast to the prize bonds. I personnally think there's a lack of info on how the draws are done.

If they're done by computer then the draw can hardly be witnessed... basically the computer would simply produce a  list of winners.. the underlying software would have to be examined.


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## JoeB (26 Aug 2010)

They have a FAQ page..

There seems to be only one question relating to the draw process itself, and the info is very scant.


			
				http://www.prizebonds.ie/about/faqs.html#Q5 said:
			
		

> When are the draws?
> The draws take place every Friday in The Prize Bond Company Office, 3B GPO, O'Connell Street, Dublin 1 at 12.30pm. The presentation of the results can be viewed live at An Post, Investment Advice Centre, Andrew Street, Dublin 2.



So the results can be viewed live... not very useful really


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## Bedlam (26 Aug 2010)

On another point on Prize Bonds a letter to the Sunday Indo on the 22/08/2010 made the following point

In 2009 the Prize Bond Company paid out €27m in prizes. Of this 12m went to 12 people. 6000 prizes are paid out every week but 99.5% of these are for only €75.00 each.

The letter writer asks the question should the Prize structure be adjusted?

Any views on this? 

Bedlam


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## JoeB (26 Aug 2010)

yes, there's another thread on how changing the prize structure radically changed the game. Search for 'prize bonds'. I've done some work on calculating the odds and the chances of winning.

There is info on how the draws are to be conducted, specified in the legislation itself. So my previous posts were a little conspiratorial perhaps, in hindsight.


Firstly, the old manual system. This seems to have applied to only the first draw, but it must have applied to subsequent draws too, until the system was changed (see below).



			
				http://www.irishstatutebook.ie/1957/en/si/0179.html said:
			
		

> 4. (1) The following provisions shall have effect in relation to the conduct of the draw :
> 
> 
> (a) there shall be an apparatus consisting of six containers capable of being rotated together, the containers being designated respectively from left to right facing the apparatus " index letter and hundreds of thousands ", " tens of thousands ", " thousands ", " hundreds ", " tens " and " units " ;
> ...




Ok, so now's there's a new system.


			
				http://www.irishstatutebook.ie/1993/en/si/0337.html said:
			
		

> 10. (1) The following provisions shall have effect in relation to the conduct of a draw:
> 
> 
> ( a ) there shall be a computer-based, software-driven, random number-generation system, which shall be subject to the approval of NTMA (the "system");
> ...



So the new system is computerised, and the description isn't complete as to how it's done. This means that the draw process is secret really. It would be like an E-Voting machine where the software was not open to public scrutiny.. if the software is obscure or hidden then the whole process is a secret, even if it described in part, it's not a full description.


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## Markjbloggs (26 Aug 2010)

JoeBallantin said:


> To be honest I'd imagine the draws are fair. But I think they're doneby computer and it's possible that there's errors in that process... like the E-Voting machines,.. can the software be trusted?
> 
> The old Irish Sweepstakes, and the Lotto, understand the importance of the draws being seen to be fair... this seems to be in contrast to the prize bonds. I personnally think there's a lack of info on how the draws are done.
> 
> If they're done by computer then the draw can hardly be witnessed... basically the computer would simply produce a  list of winners.. the underlying software would have to be examined.



Funny you should mention the Irish Sweepstakes here, as it does set a precedent for a gambling scheme like Prize Bonds being used for the enrichment of a few "connected" individuals.   Less than 10% of the money raised was ever seen by Irish hospitals.  All well documented for anyone willing to look into it.

I'm not saying that the same thing is happening now, but never underestimate the ingenuity of Irelands scam merchants to "find a way"....


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## JoeB (26 Aug 2010)

Some points on the above computerised system.

Well, firstly the reason why they changed. There are over 6,000 prizes per week, and under the old manual system it would have taken perhaps a minute to draw each number, and extra numbers need to be drawn,.. so it would take perhaps 6000 minutes to carry out, or one hundred hours. This is quite a long time, and is hardly practicable


Problems with the new system.
The bonds have two values.. 6.25 and 6.35.. each bond has a chance of winning in proportion to the capital paid, i.e in proportion to the value. This is very complicated as the higher value bonds have a chance of 1.016 in proportion to the lower values.

The seed of the random number generator is drawn by lot, but no info on how many digits it has etc etc. No info on the pseudo random number generator itself. Could it contain bugs?.. who knows? Personally I'd expect so, and this is based on an understanding of how these thing work.. just read up on RNGs on Wikipedia for examples of complex problems that can occur.

No hardware RNG... this is a problem in my view. If the seed chosen was the same then I believe the same bond numbers would be output... so effectively the seed number chosen is responsible for the entire draw.


This sentence, from the above quote..
..and the order in which the bond serial numbers are generated shall be mixed under a password-controlled software command;
.. makes no sense to me, can anyone make sense of it? If you were a computer programmer and this was in the spec what would you do?.. I don't understand it. What does it mean to 'mix' an 'order'?.. (The order was already specified earlier, so why more instructions as to the order?)


Also, this next bit is quite incredible.., again from the above quote.
...for the purposes of maintaining secrecy in relation to the draw,...

What???? The draw is designed to be secret???? This is unbelieveable I think, surely the opposite should be the case, the draw should not be secret? I find it quite incredible.. who are they maintaining secrecy from?, the paying customers?, is that fair?


One point though in the customers favour is this..


			
				same as the computer drawing page said:
			
		

> 11. (1) The number of prizes and the amount of each prize to be awarded to bonds selected for prizes in a draw shall be determined by the Operator with the approval of NTMA provided always that the total amount made available for the payment of prizes generally shall not in any event be less than the amount of interest payable on all bonds outstanding.


This means that the number of prizes is more than fair... i.e there will always be a final 75 Euro prize, even if that means the total prize fund is over 3.0%, or the current applicable interest rate. .. this is because not to have a final 75 Euro prize would result in total amount of prizes being less than the interest payable, which isn't allowable 'in any event;... But have they implemented this correctly?.. who knows, as the software is secret.

Cheers


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## johnny2shoes (27 Aug 2010)

Many thanks Joe and others.
Particularly Joe.  Much appreciated.

Johnny2shoes


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## Chocks away (31 Aug 2010)

bocook said:


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At it again, are we?


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