Tie funding returns to Lottery operator’s profits, ACE says

The National Lottery's returns to good causes like the arts should be set in direct proportion to its operator's profits, funders say.

Arts Council England (ACE) and the National Lottery Community Fund have told MPs they want a closer link enshrined in the terms of the next National Lottery licence, for which current operator Camelot is rumoured to be the preferred candidate.

The Gambling Commission has not confirmed reports that it will soon recommend Camelot over its main competitor, Allwyn, formerly known as Sazka, despite the Czech company's plans to more than double returns to good causes over the 10 year licence.

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ACE Chief Executive Darren Henley, not aware of any preferred bidder status, said the arts council has met with all bidders to explain its priority of maximising arts funding via the Good Causes mechanism.

"We have been clear that, for the fourth licence, when asked what our position is, we want to see it completely tied to the distributor's profitability."

Henley said that National Lottery funding has fallen below the rate of inflation in real terms.

Operator Camelot retained £78.1m last year from a record £8.3bn in National Lottery sales.

The company, which has run the National Lottery since its inception, is facing increasing scrutiny of its contribution to arts, sports and community grants funding, but says it has raised £45bn sice 1994 – 65% more than the Government of the time expected.

"Annual returns for Good Causes are now £500m more than they were at the start of the third licence back in 2009," a spokesperson said.

"That's 15 times higher than the increase in Camelot's annual profit after tax over the same period."

Maintain or change?

Henley said Good Causes returns could take a hit if the National Lottery changes hands.

ACE would want to make sure there weren't "teething problems" with a new operator, Henley added.

"What we want to do is maintain revenue streams all the way through. We have been assured by the DCMS and Gambling Commission that we are thinking about this."

Julian Knight, Chair of the DCMS Committee, has written to the Gambling Commission urging transparency over the weight it is giving to Camelot's incumbency.

Reports have suggested Allwyn's bid was considered to carry higher risk. The company claims it would raise £38bn for good causes over the licence period by cutting ticket prices in half but having two draws.

Whatever the Gambling Commission decides is likely to be challenged in court.

'No reason to review'

There is no need to consider changing the mandatory minimum level of returns to good causes, according to DCMS.

The conclusion, reached in its one year review of society lotteries (ie: non-National Lottery draws) published last week, has been met with disappointment by those who run them.

The People's Postcode Lottery and the Lotteries Council said it was a missed opportunity to boost charity fundraising, which suffered during the lockdowns.

DCMS found some society lotteries have increased their returns to good causes throughout the pandemic, while others' have fallen.

It said changes made last year to increase sales and prize limits "are bedding in well and beginning to have the intended effect of allowing the society lotteries sector to grow and return more to good causes, whilst also maintaining the unique position of the National Lottery".