Rise in National Lottery profits massively outstrips increase in good-cause cash

A report from the National Audit Office says Camelot profits rose 122 per cent in seven years, with good-cause money up by 2 per cent

MPs are to investigate the National Lottery after the increase in profits for the lottery operator Camelot massively outstripped the rise in returns for good causes.

A report published today by the public spending watchdog the National Audit Office says that income for good causes from the lottery rose by 2 per cent to £1.5bn between 2009/10 and 2016/17, while Camelot shareholder profits rose by 122 per cent to £71m over the same period.

The report, National Lottery Funding for Good Causes, says lottery income for good causes fell by 15 per cent to £1.63bn in the 12 months to 31 March 2017 and is expected to fall again in the current financial year.

The Public Accounts Committee, an influential cross-party committee of MPs, immediately announced an inquiry.

Meg Hillier, chair of the committee and the Labour and Co-op MP for Hackney South and Shoreditch, said that profits increasing while money for good causes fell went against the spirit of the legislation that introduced the National Lottery.

"We need to dig into how such a huge increase in profits can happen," she said. "The committee intends to hold an inquiry drawing on the NAO report in the new year, details to be announced in due course."

The report shows that lottery income for good causes rose from £1.36bn in 2004/05 to £1.93bn in 2015/16.

But it fell in 2016/17 as sales of draw-based games went down by 13 per cent and sales of scratchcards and instant-win games fell by 2 per cent.

The report blames unpopular changes to lottery games, increased competition and a trend away from draw-based games, which provide higher returns for good causes.

A spokesman for Camelot, whose licence to run the lottery expires in 2023, said it had conducted a "wide-ranging strategic review" of declining lottery sales and returns to good causes and expected a return to growth next year.

"We continue to return about 95 per cent of all lottery revenue back to winners and society, one of the highest percentages in the world," he said. "In contrast, our profit after tax is about 1 per cent of total revenue."

Jay Kennedy, director of policy and research at the Directory of Social Change, said the report showed why the government should consider letting a not-for-profit organisation run the lottery.

"What does the government expect?" he said. "When you outsource a public service to a private sector company it’s no surprise that it will do what it can to maximise shareholder profits. You can’t blame Camelot for that."

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