UK calls to overhaul lottery operations as charity-destined revenue is in decline

After a slump in proportion of its revenues destined for good causes, and the growing concern that its scratchcards and online games fuel problem gambling, UK MPs and campaigners are calling for the national lottery operations to be overhauled. 

Even though the national lottery has given £43 billion ($ 58.2 billion) to good causes since its launch in 1994, instant games now offered by the operator, such as “Red Hot 7s” and “Mega Cash Showdown”, offer prizes of up to £1 million ($1.3 million) and can be played on smartphones, but pay out less to charities because more cash is given in prizes to help drive sales. 

Lottery operator Camelot gave 28% of its revenue to good causes in the year to 31 March 2010, but its most recent accounts show the proportion given has fallen to less than 23%. The operator, however, insists that the amount paid to good causes has increased along with revenues reported over the same period, which went from £5.5 billion ($7.4 billion) a year to £8.4 billion ($133 billion). 

Calls for a review of the lottery and a national debate on its future come as rivals bid for a new license to run the business from 2024, which will be decided within the next two months. The bid is being conducted in strict secrecy and bidders have been told publicity material must first be vetted by officials at the Gambling Commission, the betting regulator that oversees this process.

Sir Iain Duncan Smith, vice-chair of the all-party parliamentary group on gambling-related harm, said there should be a fixed percentage on the amount that goes to good causes, as the operator “is beginning to look like any other gambling company”, The Guardian reported. 

Camelot said: “Focusing solely on the amount generated for good causes in percentage terms paints a deliberately misleading and damaging picture of the health of the national lottery. By making the national lottery more attractive and generous to players, we’re delivering record sales, prize money and payments in lottery duty to the Treasury. Annual returns to good causes are now over £500 million ($676 million) higher than they were at the start of this license, even though the percentage rate of return is lower”. 

As for the scratchcards and instant online games, they now account for 44% of the lottery’s total revenues. About 31% of the income from draw-based games goes to good causes, compared with about 9% from scratchcards and 12% from instant-win games. 

The lottery operator says its products are very different from those offered in the mainstream gambling sector and data showed the risk of problem play associated with lottery products was very low. It said: “We abide by rigorous controls, with numerous checks and balances in place to ensure that lottery games are safe and enjoyable for players.”

The companies hoping to oust Camelot include the Czech lottery operator Sazka, headed by Sir Keith Mills;  Italian operator Sisal, which is being taken over by Flutter; and media tycoon Richard Desmond, who owns the Health Lottery. 

Matt Zarb-Cousin, director of the campaign group Clean Up Gambling, said “We should be having a national conversation about the future of the lottery, but instead the Gambling Commission is running the process for the license as if it’s a military contract”. 

The Gambling Commission says there are controls in lottery games to prevent excessive play and approved rules and procedures for each game. It also stated that the lower rate of return from instant games was due to the fact that higher prize payouts were “necessary to drive the optimal level of sales of these products”. 

Since its launch in 1994, one of the aims of the lottery was to give more funding to Olympic sport. The first scratchcards were launched in March 1995.