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Who will run the UK lottery after Camelot?

The UK National Lottery has been run by Camelot Group since its inception in 1994. However, Camelot’s third licence to operate the lottery is set to expire in 2023, raising questions over who will take over the running of the hugely popular lottery.

Camelot has faced some controversy and criticism over the years, despite the National Lottery’s undeniable success. With the bidding process for the fourth licence open, there is a real possibility that a new operator could take over. This article explores the background to the situation and analyses the potential runners and riders to run the UK lottery from 2024.

How did Camelot come to run the National Lottery?

The UK National Lottery was launched in 1994 by then-Prime Minister John Major. It was set up under the National Lottery etc. Act 1993, with the aim of raising money for ‘good causes’ while offering prizes to players.

A competitive tender process was held to award the licence to run the lottery. Camelot Group, a private consortium, was awarded the first licence in May 1994. The group was made up of Cadbury Schweppes, De La Rue, ICL, Ladbrokes and the Royal Mail.

Camelot saw off competition from Richard Branson’s Virgin Group to land the prestigious licence. Under the terms, Camelot was awarded the licence for 7 years. It committed to raising at least £10 billion for good causes in the first 5 years.

Camelot’s subsequent licences

Camelot was awarded a second licence to run the National Lottery in 2001. The bidding process saw Camelot compete against various groups including former BBC Director General Sir Greg Dyke. After a competitive process, Camelot was awarded the second licence which ran from 2001-2009.

In 2007, Camelot was awarded the third lottery licence. This time, Indian-owned company Sugal & Damani was the underbidder. Camelot’s third licence runs from 2009-2023, after which a fourth licence will be awarded.

Camelot’s record as National Lottery operator

During its near 30-year tenure, Camelot has undoubtedly overseen huge success for the National Lottery. Some key stats and facts:

  • Over £45 billion has been raised for good causes to date
  • Camelot has met all its targets for raising money for good causes
  • The National Lottery is now the 4th biggest lottery in the world
  • Camelot has created over 5,000 UK millionaires through lottery wins
  • Around 95% of the UK adult population play the lottery regularly
  • The lottery under Camelot has launched related games such as Lotto and EuroMillions

On most metrics, Camelot has been a highly successful operator. The lottery has become firmly embedded in British culture and has raised enormous sums for charitable projects UK-wide. Camelot itself has grown into a major global lottery business.

Criticisms of Camelot

However, Camelot’s tenure hasn’t been without controversy and criticism. Some of the key issues have included:

  • The company has faced accusations of not doing enough to protect compulsive gamblers and those vulnerable to gambling addiction
  • Some argue Camelot focuses too heavily on expanding products rather than protecting customers
  • Only around 12-13% of lottery income goes on prizes, compared to 50% in some other countries
  • Camelot made over £80 million profit in 2021, fuelling questions over whether it takes too much of the income
  • There have been some disputes over unclear rules, such as Euromillions rollovers

While Camelot points to its successes, critics argue more of the proceeds should go back to the public and causes, rather than to profits. There are also concerns over some of Camelot’s business practices.

Why is the 4th lottery licence being put up for tender?

The UK government is legally required to put the lottery licence out to tender every 10-15 years. This maintains open competition and ensures regular scrutiny over who runs the lottery.

Although Camelot has run the lottery since inception, this doesn’t automatically entitle the group to retain the licence. To maintain fairness, other interested parties are given the chance to bid.

Gambling regulation has also strengthened since Camelot’s first licence award. There is now greater scrutiny over operator conduct, protections for vulnerable groups, and how they advertise products. A new licence award allows the government to set clearer expectations around these practices.

There are also questions over whether Camelot has become too dominant, and needs fresher competition to reinvigorate the lottery. Thus, the 4th licence tender presents a chance to review whether Camelot remains the best-qualified operator.

What do we know about the bidding process?

The Gambling Commission formally launched the competitive process for the 4th National Lottery licence in September 2021. The bidding is being overseen by the Commission, who will make a formal recommendation to the government.

Key details about the 4th licence bidding include:

  • The licence will run from 2024-2034
  • Bidders will be evaluated 70% on their financial proposal, 20% on social responsibility/player protections, and 10% on their innovation
  • Bidders need to pay £115,000 to enter the formal process
  • The deadline for bid submissions was in March 2022
  • A decision on the winning bidder is anticipated in September/October 2022

Various bidders entered into the formal process, and submitted their detailed proposals earlier this year. But the identities of most remain unknown at this stage.

Requirements for bidders

To be eligible to bid, potential operators must meet certain standards, including:

  • Providing lottery games that are fun, fair and safe
  • Committing funding for good causes
  • Having the technical capabilities to run games
  • Having rigorous procedures for age verification, identifying vulnerable customers etc.
  • Maintaining high standards of transparency

The requirements are stringent, meaning only experienced gambling/lottery operators are likely to compete seriously for the licence. Financial guarantees of being able to fund the lottery are also required.

What do we know about the likely bidders?

Camelot has confirmed it has entered a bid for the 4th licence, seeking to extend its long tenure running the National Lottery. Beyond this, most interested parties have not declared publicly. However, some likely contenders include:

Richard Branson’s Virgin Group

Virgin has previously bid to run the lottery in the 1990s. Industry experts believe Branson is likely to make an attractive offer again. Virgin is an established gambling industry player, also having previously run health lotteries.

La Française des Jeux (FDJ)

FDJ operates the French national lottery. It is among the biggest European lottery companies, also running betting, poker and scratchcard operations. FDJ is seen as having the scale and experience to bid strongly.

Czech operator Sazka

Sazka operates lotteries across Europe and also co-runs the Italian national lottery. It has the technical capabilities and is expected to make a competitive bid.

Company Lottery Credentials Other gambling operations
Camelot Runs UK National Lottery since 1994 Online instant win games
Virgin Group Previously bid for UK lottery Virgin Bet sportsbook and casino
FDJ Runs French lottery Major European betting operator
Sazka Operates lotteries across Europe Casinos and sports betting

These are some of the major contenders, but other gambling companies are also likely to participate in the bidding. Given the scale and prestige of running the National Lottery, the process will be highly competitive.

What could change for players under a new operator?

For players, the most immediate change would be Camelot’s branding and styling being replaced across lottery tickets, adverts and online platforms. The point-of-sale experience could look and feel quite different.

Game offerings

The core lottery games like Lotto and EuroMillions would be unlikely to change significantly. However, a new operator may look to refresh the range of games available or introduce new varieties and formats.

Odds and prizes

The allocation of prize money vs amounts raised for good causes could be rebalanced. Some bidders may propose allocating a higher percentage to prizes, to increase player interest. Jackpot sizes could be adjusted upwards.

Retail network

A new operator would gradually re-brand the retail network selling lottery tickets and scratchcards. They may also seek to expand the retail footprint, especially into convenience stores and supermarkets.

Advertising and marketing

A new marketing and branding approach would create a different tone and style for lottery advertising. There could be bigger prize promotion campaigns, or new ways of advertising via social media.

Digital experience

Updating the digital platforms for selling lottery games and tickets online is likely to be a priority. This may include dedicated mobile apps, live streaming of draws, or integration with other gambling products.

While changes would happen gradually, a different operator is likely to put their own stamp on the brand and player experience over time.

What are the main considerations for the UK government?

In awarding the critical lottery licence, the government faces some balancing acts:

1. Commercial revenue vs contributions to good causes:

Ideally, they want an operator who can maximise sales and revenue, while still upholding requirements to channel money to worthy causes. There is a balance between enabling operator profit and directing funds to charitable projects.

2. Competition vs continuity:

Too much change risks disrupting the lottery, given Camelot’s long tenure. But maintaining Camelot’s monopoly indefinitely also feels unsatisfactory. Striking a balance will be challenging.

3. Social responsibility vs commercial growth:

Growth shouldn’t come at the expense of protections against gambling addiction and excessive play. There is always tension between enabling profitable growth and applying appropriate safeguards.

Navigating these dynamics will be crucial to appointing the right long-term lottery operator for players, beneficiaries and the wider industry.

What does Camelot need to do to retain the licence?

Having run the lottery for so long, Camelot is still considered the favourite by many observers. But it faces a real battle to convince regulators it deserves to continue. Priorities for Camelot are likely to include:

  • Emphasising its long track record of raising funds for good causes
  • Highlighting innovations like new games, digital channels, and tackling problem gambling
  • Committing more proceeds to prizes to enhance player appeal
  • Promising further investments in retail technology and digital experiences
  • Improving transparency around its financial operations and profits

Camelot needs to show it has not become complacent or too dominant under its long tenure. Convincing the Commission of its future vision and commitments on social responsibility will be critical. But as the established operator, Camelot still holds an advantage if its bid is competitive.

How does the process protect a fair and neutral decision?

Concerns over a fair process led to the Lottoland legal challenge which forced the bidding timeline to be delayed. However, the government and Gambling Commission have applied various measures to protect neutrality, including:

  • An independently chaired bidding evaluation committee, with no political interventions
  • Stringent requirements for bidders to avoid anti-competitive practices
  • Publication of weightings for each aspect of bid evaluation in advance
  • Assurances that the existing operator, Camelot, will not receive preferential treatment
  • Legally binding licensing commitments on whoever is awarded the licence

These protections should isolate the decision from legal challenge or political pressure. While Camelot remains favoured, the Commission has committed to a level playing field for all bidders.

Conclusion

Appointing the operator for the 4th National Lottery licence will have enormous implications. The lottery is a vitally important part of the UK’s gambling and charitable landscape.

While Camelot remains the established choice, the bidding presents a real opportunity for renewal and fresh thinking. The Commission has emphasized this will be a fair and neutral process, with no guarantees for the incumbent operator.

Whoever is eventually appointed will need to balance commercial success with social responsibility and innovation. This will shape the lottery’s brand and offerings for the next decade. Players, retailers and good causes will await the outcome of the bidding with great anticipation.