Analysis: Camelot takes a punt on future contributions to good causes

The lottery operator is confident that doubling the ticket price of its Lotto game will have a positive effect, but others see the decision as a significant risk

Camelot, the National Lottery operator, says it is confident that the overall amount it gives to good causes will increase,  even though it is doubling the price of a Lotto ticket to £2 from the autumn and cutting the proportion of money from ticket sales that will go to its charitable arm.

Lotto is Camelot’s ‘anchor game’ and gives the highest proportion of sales proceeds, 33 per cent, to National Lottery Good Causes, which distributes the money among 13 funding bodies. This figure will fall to just over 31 per cent to produce part of a planned boost to the prize fund from 45 to 47 per cent. The rest of the increase will be made up by a 0.1 per cent reduction in the amount going to the company as profit.

Sales decline

Sales across all National Lottery games hit a record high of £6.5bn in 2011/12, Camelot says, but sales of Lotto tickets have been declining steadily over the past few years. "If nothing is done to address this, we expect Lotto’s contribution to good causes, and to the Exchequer through lottery duty, to fall over the next 10 years," says a Camelot spokesman.  

The figures underpinning Camelot’s predicted increase in the money going to good causes are, says the spokesman, commercially sensitive and confidential. "We would not be making changes if we did not think it was good for players and good causes," he says. "If sales are up, profits, prize money and good cause money are up. It would be counterproductive to introduce something that would harm our bottom line."

But is Camelot taking too much of a gamble on its future success? Jay Kennedy, head of policy at the Directory of Social Change, says: "It’s a convenient time for Camelot to make an announcement like this because the lottery is generating significant revenue. The claim that more money will go to good causes rests on an assumption that the price increase will generate more revenue, and that revenues will continue to be buoyant over time. There is no guarantee of either."

Kennedy says people could be put off buying tickets because of the price hike. "If Camelot reduces the percentage now, justifying it on the back of existing revenues and telling charities they don’t need to worry because more money is coming in – well, that flies at this point, but it might not in five years," he says.

Tabloid outrage

Camelot says it is not worried about people being put off by the ticket price hike, despite the tabloid outrage that greeted the announcement. The Daily Mirror claimed the  percentage going to good causes would drop to 27 per cent.

A Camelot spokesman says the percentage returned to good causes fluctuates every week, depending on the mix of games sold, because the contribution of each individual game is different.

The proportion that went to good causes in the half-year to 29 September 2012 was 27 per cent, but the actual figure was a record amount of £952.8m, he says - 3.8 per cent up on the same period of the previous year. About 28 per cent of total National Lottery revenue is expected to go to good causes over time, he says, and "it's far more important to focus on the amount of money that is returned to the good causes in absolute cash terms."

Camelot’s changes have been "agreed in principle" by the National Lottery Commission, which regulates the lottery on behalf of the Department for Culture, Media and Sport, and are likely to be licensed for launch in the autumn. In a statement, the commission says: "Commissioners were satisfied that returns to good causes will continue to be maximised".

Topics:
Fundraising

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