Operator sees huge rise in profits despite a drop in sales and less money going to good causes
An inquiry has been launched after an official report found lottery operator Camelot’s profits have consistently risen on the back of cash to good causes falling.
Lottery sales fell by 9% to £6.93bn in the 2016-17 tax year with Camelot predicting a further fall in sales and income for good causes in 2017-18.
However profits for the firm rose from £39 million to £71 million in the last six years – a rise of 122%
The lottery operator told the National Audit Office (NAO) that scratch cards and instant-win games returned less to good causes due to the need to offer a higher proportion as prizes to encourage participation.
Returns for good causes are higher from sales of draw-based lottery games, which dropped 13% than for scratch cards and instant-win games, which fell by 2%, the report said.
Around 34p per £1 spent on draw-based games bought online is given to good causes, compared to 5-10p for scratch cards.
The UK parliament’s spending watchdog has now launched an inquiry into whether the National Lottery operator is failing the good causes it was set up to fund.
Meg Hillier, chair of the public accounts committee questioned whether Camelot was operating within the National Lottery Act.
“Profits increasing while money for good causes falls really does go against the spirit of the act.
“We need to dig in to how such a huge increase in profits can occur,” she said.
The NAO said distributors, which include Heritage Lottery Fund and the Big Lottery Fund, often had commitments spanning many years “so it is likely that commitments will exceed their fund balance at a given date”.
A Camelot spokesman said: "The NAO report restates what we publicly acknowledged back in June in relation to National Lottery sales and returns to good causes. Since then, we have carried out a wide-ranging strategic review of the business and announced strong plans to get the National Lottery back into growth next year and raising as much money as possible for good causes.
"We continue to return around 95% of all National Lottery revenue back to winners and society, one of the highest percentages in the world. In contrast, our profit after tax is around just 1% of total revenue."
