The Big Question: Do we need Richard Branson to run the National Lottery?

Why are we asking this now?

Sir Richard Branson has twice tried to gain control of the National Lottery, but lost both times to Camelot. It could be third time lucky, however, because this time Camelot itself is up for sale – or rather, 80 per cent of it is – and Branson, the man behind the Virgin empire, with a net worth of an estimated £1.5bn, is expected to be one of the bidders. Initial bids have to be in this month.



Is Camelot in trouble?

If there is one firm that has not suffered during the recession, it is Camelot. In these troubled times, when credit is scarce and people fear for their jobs, more of us than ever are willing to dip into our pockets and hand over a £1 coin to buy the dream that the astronomic odds will work for us, and solve all our financial problems in one lucky break.

Last month, Camelot published their annual report for the year 2008-09, which showed that they had achieved sales of £5.1bn in the year ending 31 March 2009. That figure, representing very nearly 100 million tickets sold every week, is up 3.6 per cent on the previous year's turnover of £4.9bn. It is Camelot's best sales figures for 10 years. The company's chief executive, Dianne Thompson, was rewarded with a pay package which, including bonuses and pension contributions, came to an eye-watering £1.8m.



So why is the company up for sale?

Camelot has five owners, and running a lottery is not the core business of any of them. They are Cadbury Schweppes, the printers De La Rue, Fujitsu Services, Thales Electronics, who are specialists in hi-tech military hardware, and the Royal Mail.

Royal Mail has a strategic interest in the company, because of the large number of lottery tickets sold in post offices, and is holding on to its 20 per cent stake for now. That does not rule out the possibility that they will sell their stake to the highest bidder later.

The other four agreed in April to appoint the investment bankers Greenhill and NM Rothschild to organise a sale. It is reported that Cadbury and Thales were determined to pull out, and the other two partners agreed. Cadbury is currently trying to fight off a takeover bid by the US food giant Kraft.



Will the Government get involved?

The National Lottery is a monopoly created by an Act of Parliament, and therefore any new owner would need to be approved by the Government. Besides, the Department of Culture, Media and Sport has a special interest in Camelot's future, because the company has promised to contribute £2.2bn to the 2012 London Olympics. They will want to be very sure that whoever owns Camelot makes good that promise.



How much is Camelot worth?

Despite having a customer base of more than 30 million people every week, Camelot will be a lot cheaper than a normal firm of that size. There are two reasons. One is that its millions of customers are not big spenders. In terms of its total turnover, Camelot is operating the sixth largest lottery in the world, but measured by the average amount spent by each customer – £3 a week in Camelot's case – it is 66th in the world league table. This is not something they are embarrassed about. They cite it as evidence that they are not getting people to gamble sums that they cannot afford.



What about its profits?

These are also very small for its size. When Camelot successfully renewed its license to run the Lottery, in April 2007, the current shareholders agreed with the National Lottery Commission to cut costs to 5 per cent of turnover, and profits to between 0.3 and 0.4 per cent, down from 0.5 per cent. It therefore keeps about £30m a week in profits, with the rest donated to good causes. For that sort of money, the sale is likely to fetch £250m.



But should Camelot be making a profit at all?

It is an old source of controversy that Camelot is and always has been in the business of running the Lottery for profit, albeit a modest one in relation to its total income. No other private company enjoys a government-protected monopoly, and free prime-time television publicity every week as Camelot does. Many people have asked why they need to keep any of the takings, apart from what they need for their operating costs.



How does Branson enter the picture?

You have to go back to the founding of the National Lottery in 1994. The Conservative government that introduced it did so in the teeth of considerable opposition, especially from other gambling interests like the pools and the unions who represented their staff. Others argued that it was immoral for the Government to sponsor gambling At the very least, the Labour Party argued that the Lottery should not be run for private profit, and included that policy in the manifesto on which they won the 1997 election.

Taking them at their word, Branson headed the consortium called the People's Lottery, who promised to be non-profit-making. They lost the original bid to Camelot, but tried again when the licence first came up for renewal, in 2000. The woman who then headed the Lottery Commission, Helena Shovelton, seemed to be of the same mind as the Labour Party and decided that Camelot should be barred from bidding again, which would have handed the contract to Branson's consortium. But Shovelton's decision was overturned in a High Court, and she resigned.

The commission then looked at the rival bids, and decided that since Camelot already had 24,000 terminals in place from which to sell Lottery tickets, awarding the licence to any other bidder would risk a fall in sales. Having almost had the National Lottery in his grasp, Sir Richard was understandably frustrated, and did not enter the bidding in 2007.



What does Branson know about running the Lottery?

Branson originally made his fortune selling records, but he has turned into something of all-rounder. Virgin Group's most visible businesses now are its airlines and trains. He launched Virgin Airways in 1984, Virgin Trains in 1993, Virgin Mobile in 1999, and Virgin Blue (his low-cost Australian airline) in 2000. He has been regularly voted the most admired entrepreneur by the British public, and over the past few years burnished his green credentials by devoting millions to tackling climate change. His repeated – and often very dangerous – attempts to break world records have also met with admiration, and his 1998 autobiography was a bestseller.

All of which may or may not recommend him to the Lottery. There are actually very few private firms anywhere in the world with the relevant experience to run a national lottery. One is the giant Indian firm, Sugal & Damani, which bid for the National Lottery two years ago, and may now join the bidding for Camelot. With that exception, Sir Richard is probably just as well-qualified to run a lottery as, for example, a chocolate manufacturer, or an arms company, or the private equity firms that are currently showing an interest in buying Camelot.

Should the Lottery be the next venture for the man behind Virgin?

Yes...

*Branson's bids for a role in 1994 and 2000 show his commitment to the idea of a lottery

*His track record in business suggests he has more than enough know-how to be successful

*Few other investors have been as willing to invest capital in a national lottery

No...

*None of his business ventures have given him experience of running a lottery



*His previous attempts to run the lottery failed



*With all his trains, his planes, his music, his mobile phones, and much else, hasn't Branson had his finger in enough pies?

a.mcsmith@independent.co.uk

Voices
The Sumatran tiger, endemic to the Indonesian island of Sumatra, is an endangered species
voicesJonathon Porritt: The wild tiger population is thought to have dropped by 97 per cent since 1900
Arts and Entertainment
Beast would strip to his underpants and take to the stage with a slogan scrawled on his bare chest whilst fans shouted “you fat bastard” at him
musicIndie music promoter was was a feature at Carter gigs
News
news
Arts and Entertainment
Story line: Susanoo slays the Yamata no Orochi serpent in the Japanese version of a myth dating back 40,000 years
arts + entsApplying the theory of evolution to the world's many mythologies
PROMOTED VIDEO
News
Performers dressed as Tunnocks chocolate teacakes, a renowned Scottish confectionary, perform during the opening ceremony of the 2014 Commonwealth Games at Celtic Park in Glasgow on July 23, 2014.
news
Life and Style
Popular plonk: Lambrusco is selling strong
Food + drinkNaff Seventies corner-shop staple is this year's Aperol Spritz
News
Gardai wait for the naked man, who had gone for a skinny dip in Belfast Lough
newsTwo skinny dippers threatened with inclusion on sex offenders’ register as naturists criminalised
News
Shake down: Michelle and Barack Obama bump knuckles before an election night rally in Minnesota in 2008, the 'Washington Post' called it 'the fist bump heard round the world'
newsThe pound, a.k.a. the dap, greatly improves hygiene
Arts and Entertainment
La Roux
music
Arts and Entertainment
Graham Fellows as John Shuttleworth
comedySean O'Grady joins Graham Fellows down his local Spar
News
people
News
Ross Burden pictured in 2002
people
News
Elisabeth Murdoch: The 44-year-old said she felt a responsibility to 'stand up and be counted’'
media... says Rupert Murdoch
Arts and Entertainment
tv
Extras
indybest
Sport
Arsenal signing Calum Chambers
sportGunners complete £16m transfer of Southampton youngster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?

Day In a Page

The children were playing in the street with toy guns. The air strikes were tragically real

The air strikes were tragically real

The children were playing in the street with toy guns
Boozy, ignorant, intolerant, but very polite – The British, as others see us

Britain as others see us

Boozy, ignorant, intolerant, but very polite
Countries that don’t survey their tigers risk losing them altogether

Countries that don’t survey their tigers risk losing them

Jonathon Porritt sounds the alarm
How did our legends really begin?

How did our legends really begin?

Applying the theory of evolution to the world's many mythologies
Watch out: Lambrusco is back on the menu

Lambrusco is back on the menu

Naff Seventies corner-shop staple is this year's Aperol Spritz
A new Russian revolution: Cracks start to appear in Putin’s Kremlin power bloc

A new Russian revolution

Cracks start to appear in Putin’s Kremlin power bloc
Eugene de Kock: Apartheid’s sadistic killer that his country cannot forgive

Apartheid’s sadistic killer that his country cannot forgive

The debate rages in South Africa over whether Eugene de Kock should ever be released from jail
Standing my ground: If sitting is bad for your health, what happens when you stay on your feet for a whole month?

Standing my ground

If sitting is bad for your health, what happens when you stay on your feet for a whole month?
Commonwealth Games 2014: Dai Greene prays for chance to rebuild after injury agony

Greene prays for chance to rebuild after injury agony

Welsh hurdler was World, European and Commonwealth champion, but then the injuries crept in
Israel-Gaza conflict: Secret report helps Israelis to hide facts

Patrick Cockburn: Secret report helps Israel to hide facts

The slickness of Israel's spokesmen is rooted in directions set down by pollster Frank Luntz
The man who dared to go on holiday

The man who dared to go on holiday

New York's mayor has taken a vacation - in a nation that has still to enforce paid leave, it caused quite a stir, reports Rupert Cornwell
Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

Best comedians: How the professionals go about their funny business

For all those wanting to know how stand-ups keep standing, here are some of the best moments
The Guest List 2014: Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks

The Guest List 2014

Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks
Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

Jokes on Hollywood

With comedy film audiences shrinking, it’s time to move on