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UK National Lottery contributions to good causes up by 2.4% 25/07/21
• The UK National Lottery contributed £1.83bn to the National Lottery Distribution Fund for good causes during the year ending 31/03/21

With unclaimed prizes (£100.3m) factored in, £1,887.5 million was generated for Good Causes in 2020/21 – the equivalent of £36 million every week. Lottery Duty to government exceeded £1 billion for the first time, which contributed to a record £3.1 billion that was delivered to society through Good Causes returns, Lottery Duty, and retailer commission. With approximately 1% of sales retained as profit by Camelot under the terms of its licence, and 4% spent on operating costs during the period, The National Lottery continued to return around 95% of all sales revenue

After paying £60.0m towards investments – part of the lottery licence conditions – and £10.6m in other adjustments, this left the National Lottery’s primary contribution to good causes at £1.73bn, up 3.9%.

Camelot succeeded in growing sales of all six of its draw-based games to £4,690.7 million, an increase of £153.6 million. This was primarily driven by Lotto, with a new feature introduced in November that sees around a million players win an additional cash prize of £5 for matching two main numbers in a ‘Must Be Won’ Rolldown draw. This innovation has proved popular and has supported the growth of the flagship game while most others in international markets around the world are in decline.

Since its launch in November 1994, the National Lottery has raised over £43 billion for good causes that include sports (including Olympic athletes), arts and heritage, as well as health, education and the environment. Funds are raised from the sale of National Lottery games and supplemented by unclaimed prizes and interest on balances of funds held. The funds for good causes are held in the National Lottery Distribution Fund (NLDF), with the Gambling Commission ensuring that payments from the Lottery operator to the good causes are accurate and on time.

Amounts payable to good causes increased significantly as the year went on, thanks in part to the relaxation of novel coronavirus (Covid-19) restrictions. In the first quarter of the year – ended 30 June 2020 – £382.3m, down 1.6% from 2019-20. However, in the second quarter this increased to £452.9m. After a slight dip to £444.8m in the third quarter, contributions reached £551.3m in Q4. This figure was up 25.5% from the same quarter of 2019-20.

Operators bid for the fourth National Lottery licence tender

Sazka Group was the first business to announce its application in October 2020, followed by Sugal & Damani. Camelot – which currently operates the lottery – showed interest by completing the selection questionnaire, but has not confirmed whether it is competing for the tender. Last month, Italian lottery operator Sisal partnered with BT to bid for the license.

The winning bid will operate the lottery for the next 10 years. A decision on the bid will be made by the Gambling Commission later this year.

The National Lottery has been run by Camelot since its launch in 1994. Its current licence was awarded in 2009 and extended by four years and will expire on 31 January 2023. The company underwent a review in 2017 after a National Audit Office report found that its profits had risen by 122 per cent over seven years while returns to good causes increased by only two per cent.

Now, 27 years after that initial win, the fight for the fourth term running the National Lottery looks like it could be the fiercest yet. This time, Camelot’s rivals smell blood. “They appear to have set out their stall genuinely to change this time,” says a senior source from a rival bidder. “Because if they don’t change this time, they’re probably accepting it’s a forever state of affairs.

The winner won’t walk away with big margins, points out Warwick Bartlett, CEO at Global Betting & Gaming Consultants (GBGC), but it will have control of a practically recession-proof business model with a guaranteed payout for shareholders every year.

Challengers face a tough battle to wrest it away from the incumbent, though. “They already have their offices, the network, the relationship with the retailers,” says Bartlett. “Plus, it would be quite a political decision to remove Camelot.” Were they to pick an untested alternative and it all went wrong “it would be all over the press. So, if it’s not broke, why try to fix it?”

Still, say rival bidders, there is plenty that could be improved upon. “At nearly £8bn the National Lottery is one of the largest lotteries in the world but when you look at the participation, it has been declining,” says Camilla Folladori, international business development director at Sisal, which confirmed its rival bid in April 2021. “With consumer relevance it’s lost a bit of its shine. It started with 40 million players at its onset, and now it’s at a bit less than 30 million. In particular, since there were a number of changes to its Lotto product, there was an additional decrease. When you look also at the per capita spending it’s definitely way lower than many other lotteries in western Europe. This means there are opportunities.”