Uncertainty reigns in the court of Camelot

The money may still be rolling in despite a recession and impending cuts, but much is happening to the National Lottery and the company behind it

National Lottery
National Lottery

It's all change for the National Lottery at the moment. From the way the Big Lottery Fund organises itself to the business operations of Camelot, the company that runs the game, the lottery is facing change.

The lottery regulator, the National Lottery Commission, is now pondering whether Camelot can enhance its shop terminals so people can use them to top up mobile phones and pay their council tax.

At the same time, Camelot is looking into expansion overseas and the advertising of the National Lottery is being brought into line with that of other forms of gambling. Simultaneously, the coalition government is changing the way the BLF works.

Such changes might leave charities confused or concerned, but the latest annual sales figures for National Lottery tickets are positive. In the year to 31 March 2010, sales rose by 5.9 per cent to reach a total of £5.4bn, of which £1.5bn is earmarked for good causes.

But the Canadian teachers whose pension fund paid £389m for Camelot earlier this year are not satisfied, because it makes no more than 0.5 per cent profit on turnover - about £30m a year - from its UK monopoly. As a result, Camelot has been told to win contracts to run six major lotteries outside the UK.

Despite the pressure to look abroad, Dianne Thompson, the chief executive of Camelot, denies that going global would dilute Camelot's focus on the UK and thus harm the interests of charities here.

But the pressure is on Camelot after its initial bid to run extra services through its 28,500 lottery terminals was rejected by the National Lottery Commission, despite the company's offer to hand over 80 per cent of the profits it made from the venture to good causes.

Camelot's revised proposal, which the regulator is expected to make a decision on in November, was not helped when a number of charities - among them the Salvation Army and Christians Against Poverty - waded in and highlighted a host of issues, including worries that vulnerable people might be tempted to gamble with money they intended to pay bills with.

Paying bills is also the concern of charities after the pledge by Jeremy Hunt, the government's culture secretary, to "return the National Lottery to its original good causes" by cutting its grants to the public sector and restricting the overheads of lottery distributors.

In terms of funding, the BLF's share of the good causes cash raised by the lottery is expected to shrink from 50 per cent to 40 per cent by 2012. At the same time, the share of the money that goes to sports, arts and heritage will rise from 50 to 60 per cent.

Unconvinced by assurances that good causes will not lose out, some charity networks have urged the government to guarantee voluntary sector funding and warned that a 5 per cent cap on distributor overheads would encourage fewer, larger grants and thereby threaten the viability of some smaller causes.

As a result, both the National Association for Voluntary and Community Action and the Directory of Social Change have called for the BLF's focus to remain on supporting local organisations. The National Council for Voluntary Organisations has also waded into the debate, warning that overall funding for good causes might fall and that, even if the BLF focused its funding on the sector, as mooted in the ongoing consultation about the plans, there might still be a drop in the money available.

Some warn that a simpler problem might limit money for charity if Camelot's plan to handle millions of extra transactions through its electronic network does go ahead: that is, slower sales from longer queues.

Dominic Taylor, chief executive of the bill payment firm PayPoint, which would potentially face competition from Camelot if the plans are approved, has claimed that allowing Camelot to branch out into bill payments "will mean delays at the tills, lottery players being turned away and less money for good causes". Camelot counters that it "can see no negative impact on consumer queuing in retail" from its plans.

Mark Harris, the chief executive of the National Lottery Commission, says its decision about Camelot's plans will bear in mind any potential impact on the third sector.

"In light of Camelot's current plans, and the controls we have in place in its licence, we are talking to Camelot to ensure that the National Lottery continues to be adequately resourced and that the £1.6bn raised each year for good causes is not put at risk," he says.

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