The profits of the company that runs the National Lottery have increased by 122 per cent since 2009/10, but returns for good causes have risen by only 2 per cent, the Public Accounts Committee has found.
In a report published today, the committee warns that in the face of falling lottery sales the organisations responsible for distributing good-causes funds might not be able to afford to fulfil funding commitments they have made.
The fall in returns for good causes has happened because more players are choosing to buy scratchcards and fewer people are participating in the live draw events, which bring higher returns for good causes, the report says.
People are also less aware that the National Lottery raises funds for good causes than they were in previous years, it says.
But it also concludes that the 14-year licence to run the scheme, which was last renegotiated in 2012, is too generous to Camelot and does not contain a reopener or break clause, so it can be changed only if Camelot agrees.
Meg Hillier, the committee chair and Labour MP for Hackney South and Shoreditch, said the National Lottery’s founding principle of raising money for good causes was "under threat".
"It would be a sad and significant loss to many deserving organisations and individuals if that funding, which has amounted to some £37bn since 1994, should dissipate as a result of inaction now," said Hillier.
She said the fact that the figures for 2016/17 showed a year-on-year fall in good-cause income of 15 per cent was a "stark illustration of the challenge to be tackled".
"Lessons must be learned from the renegotiation of Camelot’s licence in 2012, which was too generous to the provider and too inflexible to protect the interests of grant recipients," she said.
The report also calls for the Gambling Commission to ensure that any changes to games suggested by Camelot would secure a fair return to good causes and the next operating licence includes more flexibility to allow for changing circumstances.
It says the Department for Digital, Culture, Media and Sport is failing to provide the information lottery distributors need to manage their future grant programmes. The report says the DCMS needs to provide more data and intervene where it believes the commitments might be unaffordable.
Camelot also needs to better publicise and explain how much money goes to good causes from each type of game, the report says, and the improvements should be implemented by September.
A Camelot spokeswoman said it would work with the Gambling Commission, the DCMS and the National Lottery distribution bodies to maximise returns to good causes. She said that during the most recent licence period annual returns had been on average 30 per cent higher than in the previous period.
"We’ve already seen some encouraging signs that the initiatives from the strategic review that we carried out last summer are working, and are confident that we have strong plans to get the National Lottery back into growth," she said.
A spokeswoman for the Gambling Commission said: "We are extremely disappointed that returns to good causes have declined and we will continue to hold Camelot to account for the performance of the National Lottery."
She said it had asked Camelot to review the effectiveness of its board over the past 12 months and strengthened its approach to assessing Camelot’s performance.
The DCMS did not respond to Third Sector’s request for comment.