City & Business: Uphill lottery

Click to follow
The Independent Online
THE NATIONAL lottery will probably be a huge commercial success. A distinctly sore Richard Branson, one of the seven unsuccessful bidders, called it a licence to print money.

But it is not quite the racing certainty it has been widely portrayed as. This country has no lottery culture. Customers will have to be wooed from other forms of gambling such as bingo and the pools, and other discretionary spending such as confectionery and newspapers.

Camelot, the winning consortium, has to get it right first time. It must generate sufficient demand at the start to be able to offer the pounds 1m-plus prizes that feed the hype. The idea is to create a bit of mild hysteria across the nation every Saturday night.

And Camelot has to be on time too, fully ready for the launch in early November. As we report on page 1, Oflot, the regulator policing Camelot, plans to clobber it with fines of around pounds 1.5m per day for any delay.

One rival bidder calculated that its entire prospective profits would be wiped out by a two-month delay. On top of possible fines, Camelot would also lose precious weeks of its licence. The seven-year clock starts ticking from September.

Camelot has an enormous task over the next six months. ICL hasn't even begun manufacturing the in-store terminals yet. Then there is the time-consuming business of recruiting and training thousands of shopkeepers.

Insiders say it was the comparatively early start date in its bid that helped Camelot to win. That and the large number of retail outlets in its planned distribution network.

It has already put in a lot of spadework, even before Wednesday's bid decision. By then it had spent pounds 6m and it has had a team of 50 people visiting potential outlets since September. By launch, Camelot will have spent around pounds 100m before seeing a penny in revenues.

Any start-up business is fraught with difficulty. A start-up in an entirely new industry is doubly so. The potential for glitches and delays is there, however meticulous the preparation. Camelot will deserve its reward if it pioneers a smooth ride to launch.

Punters have not forgotten, nor forgiven, the fiasco when the Grand National was called off last year. Cock-ups happen. A glitch in the national lottery would be equally embarrassing, equally humiliating, and a great deal more expensive.