Records show that senior officials in the Department of the Taoiseach were also worried that Rehab and the Central Remedial Clinic had found a way of circumventing the Gaming and Lotteries Act to overcome prize-fund limits for private lotteries by pooling their resources.
Frank Flannery, the chief executive of the Rehab Group and a Fine Gael national handler, met with senior officials in November 1987 to discuss plans by Rehab and the CRC to jointly run a new lottery.
Rehab had applied unsuccessfully for the licence to operate the National Lottery which began in March 1987.
Mr Flannery said they wanted to become the second biggest lottery in the State, although it would be on a small scale compared to the National Lottery.
Several charities like Rehab, which had previously organised pools, were concerned that their income from such games would be seriously affected by the launch of the National Lottery.
To ease such concerns, the Government had agreed to remove the ban on advertising for privately-run lotteries as well as raising prize limits from £300 to £3,000 for once-off lotteries, and from £500 to £10,000 for periodic lotteries.
Mr Flannery estimated the Rehab/CRC lottery would only gain 5%-10% of the market.
He also signalled that Rehab might organise lotteries for other charities in future but would “operate strictly in accordance with the law”.
As Rehab and CRC had combined their two licences on one lottery ticket, Mr Flannery said there was no reason why a bigger number could not be used in the future.
He explained that their new lottery would offer a weekly prize of both a car and £10,000 — twice the maximum prize fund — as two licences had been obtained.
State papers show the National Lottery contacted the Minister for Finance, Ray MacSharry, to express its concern about the impending launch of the Rehab/CRC nationwide lottery in October 1987.
The State-owned company under the control of An Post, said it looked like they could operate lotteries with a prize fund in multiples of the £10,000 limit which meant they could rival the National Lottery.
A memo drafted for the Taoiseach, Charles Haughey, in November 1987 said the problem was that if Mr Flannery got 20 charities to co-operate he would have “a product to compete in a very significant way with the National Lottery”.
Records show National Lottery management expressed “very strong disquiet” about the possible inroads Rehab could make on its viability.
Officials in the Department of the Taoiseach recommended that Mr Flannery should be informed that the law is that a weekly prize fund could not exceed £10,000.
They suggested the prize limit could be reduced “well below” £10,000, or alternatively an attempt could be made to “buy off” Rehab/CRC through generous allocations of funding from National Lottery money.
Either option had drawbacks, as the Government could be accused of “crippling a major fundraising venture planned by two highly reputable charities which enjoy considerable public support.”
The Taoiseach was subsequently recommended to include in his speech at the launch of the National Lottery that Rehab should accept the £10,000 limit.