Lottery funding down for third consecutive year

The National Lottery's allocation of funds to the arts was down 3.1% in 2023-24, as the total net amount of operating proceeds made available for good causes dropped for the third successive year.

The latest National Lottery Distribution Fund (NLDF) report from the Department of Culture, Media and Sport (DCMS) reveals the share of income awarded to the arts in 2023-24 was £347m, down from £358m the previous year.

The fund allocates money to causes across the arts, sports and heritage – each of which receives 20% – as well as community – which includes charitable, health, education and environment and receives 40%, with each sector experiencing a proportional decline.

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The total net operational proceeds available for distribution fell for the third year, with the report noting that, overall, ticket sales were lower in 2023-24 than 2022-23. This was primarily driven by declining numbers of instant win games sold, attributed to ongoing economic and cost-of-living pressures.

DCMS said it continues to work with lottery-distributing bodies to maintain fund balances at "an appropriate level” and to ensure they can meet their commitments. It added that it is “assured” distributors have well-developed strategies to construct their existing and proposed spending programmes “within a falling income scenario”.

Of the four national arts councils in receipt of NLDF, Arts Council England was the only one whose grant liabilities due in the next five years outstrip its available balance, with a difference of £165m, down from £208m the previous year.

Czech business Allwyn, which took over as operator of the National Lottery on 1 February this year, had previously promised to raise £38bn for good causes over the next decade – £7.6bn of which would go to the arts (£760m per year) – by increasing sales of draw-based games that donate a greater proportion of profits to good causes.

However, after taking over the licence, Allwyn admitted it would be unable to meet its pledged charitable spending targets, which were the basis for the franchise's award.

Legal action

The handover followed a contentious and protracted bidding process in which Allwyn ultimately acquired Camelot, the former licence operator, for 20 years. In effect, the deal meant the Czech company took control of the UK’s largest distributor of charity funds and the fourth-biggest procurement contract awarded by the UK government in the past decade, worth £6.5bn.

Camelot sued the Gambling Commission over the decision, but the case was dropped after its takeover by Allwyn.

In a separate development, British publishing group Northern & Shell, which runs the Health Lottery, has also launched legal action against the commission, alleging it mishandled the 2022 National Lottery licence competition after its bid to become a franchisee was rejected.

Northern & Shell claims it was not given adequate feedback at an early stage about the quality of its bid.

Owned by media proprietor Richard Desmond, Northern & Shell has also raised concerns about press leaks during the confidential bidding process and an alleged conflict of interest for Gambling Commission adviser Ed Duckitt, who is Managing Director of Rothschild & Co and who had previously worked for Allwyn.

The court case is ongoing.

*This article has been corrected to reflect that funding has been declining for three years and not four.