In a speech made today at the annual conference of the Lotteries Council in Hinckley, Leicestershire, Andy Duncan, managing director of Camelot, outlined a number of threats to the lotteries sector, including the recent period of austerity and the advent of gambling on mobile phones.
But Duncan said the emergence of the Health Lottery had muddied "the clear blue water that traditionally existed between the National Lottery and traditional society lotteries".
He told his audience, which included society lottery operators, that they should be in no doubt that the Health Lottery, which is a network of 51 society lotteries operating under one brand, was a national competitor because it advertised nationally, televised its draw and frequently compared itself with the National Lottery.
He said the structure of the Health Lottery defied the conventional wisdom that lotteries existed primarily to make returns for society rather than for those who operate them.
And if something was not done, he said, large gambling companies could attempt to follow the Health Lottery’s example and begin their own lotteries on a similar scale, which could in effect reduce returns for good causes.
"Put simply, if you open up a national lottery to competition from lots of different society lotteries operating at a similar level, the inevitable consequence is that the money players spend becomes fragmented across all of the different lotteries available," he said.
"That leads to smaller jackpots, fewer tickets sold and, ultimately, far less money being raised for good causes. We’ll all lose out."
Duncan went on to compare the Health Lottery’s running costs with those of Camelot and highlighted how much of its proceeds went to good causes.
"Our analysis is that, after prizes are paid, retailers are paid and contributions are made to good causes – at the statutory minimum of 20 per cent – it would seem that the Health Lottery incurs about 50p in the pound in expenses," said Duncan. "That 50p compares with about only 5p in the pound for National Lottery games. It would seem to be a pretty staggering difference."
He went on to outline some proposals, including reintroducing the cap on lottery expenses that existed before the Gambling Act 2005 and increasing the minimum contribution to good causes for national competitors to the National Lottery.
But Duncan said he was in favour of deregulation and lighter controls on small society lottery operators and that Camelot stood "shoulder to shoulder" with them.
He called for a simplification of the licensing system and a reformed tax system for society lottery operators.
Mimi Turner, director of marketing at the Health Lottery, said she was amazed that Camelot spent so much time worrying about her organisation.
"Camelot is a very large, very profitable and very successful monopoly business whose executives earn millions and millions of pounds," she said. "It is simply huge compared with the Health Lottery. It sells more tickets in a week than we sell in a whole year.
"The Health Lottery was set up by community companies to help raise money for local health charities and all our business focus is on that aim. We offer players value for money and more chances to win, and that gives the 51 community companies that raise money through the Health Lottery the ability to support thousands of small deserving health projects that are in desperate need of funding."