Next UK lottery operator will have to give share of profits to charity

The next operator of the UK’s National Lottery will have to give a share of its profits to good causes after the incumbent came under fire for not increasing the amount of money it passed on to charities despite significant profit growth.

The Gambling Commission, which oversees the running of the National Lottery, said on Friday that whoever ran the lottery would have to give a fixed sum to the fund that distributes donations to charitable causes as well as a percentage of any profits made.

The fixed sum will be determined during the bidding process, the commission said.

Under current rules, a set amount of each pound spent on lottery tickets is paid to the government in tax, to retailers and to Camelot, the current operator, with the remainder split between prizes and charitable funds.

An industry executive with knowledge of how lotteries operate said the change was a “radical shift” that would mean that operators could risk becoming leveraged if they failed to make enough sales to deliver the fixed sum.

The winner of the next National Lottery licence will also be expected to hold it for only one 10-year term. Previously, operators had been able to extend this by up to five years.

The National Lottery is one of the most lucrative contracts awarded by the government to a private company and one of the biggest lotteries in the world. The opening of the competition for bids for the next licence on Friday is the fourth since its inception in 1994.

The shift in the design of the licence has come as the result of criticism made by MPs in 2018, after a cross-party report found that while contributions to charities had increased 2 per cent between 2010 and 2017, Camelot’s profits had increased 122 per cent to £71m.

In the year to the end of March, the company, which is owned by the Ontario Teachers’ Pension Plan, reported record sales of £7.9bn. It did not disclose its profits but said that it had returned £1.8bn to good causes, a 12 per cent increase on the year before.

After winning the right to run the lottery for a third time in 2009, Camelot was granted an extension to its current contract in 2012, allowing it to operate the lottery until 2023.

Groups that have expressed an interest in bidding for the next licence include Camelot, the media mogul Richard Desmond, who runs the Health Lottery, and Sazka, which runs lotteries in the Czech Republic, Austria and Greece. Richard Branson, the billionaire founder of Virgin Group, dropped out of the process after the pandemic forced him to focus on funding his companies.

Neil McArthur, chief executive of the Gambling Commission, said: “We want the next licensee to have greater autonomy to meet the needs of players in 2023 and beyond, whilst ensuring there is clear accountability for the performance of the National Lottery.”

Sazka and Camelot both said that they were yet to reach a final decision on whether they would bid. Mr Desmond did not respond to a request for comment.

Full details of the fourth licence will be given to the bidders approved by the Gambling Commission in October.

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