Camelot to come up £500m short

Camelot faces a £500m shortfall in the money it raises for good causes because of the long-term decline in lottery sales, a former official of the game's regulator has warned.

Camelot faces a £500m shortfall in the money it raises for good causes because of the long-term decline in lottery sales, a former official of the game's regulator has warned.

Mark Slattery, who recently stepped down as the National Lottery Commission's head of communications, said last year's £4.62bn lottery sales were the second lowest on record. This has left Camelot with an uphill task to match the £10.6bn it raised for good causes during its previous lottery licence.

His analysis for The Independent on Sunday came as the Commission signalled its concern that Camelot could struggle to rebuild sales over the next four years, despite its success over the past 15 months in stemming a long slump in sales.

The Commission's annual report, published on Friday, showed that Camelot's payments to the National Lottery Distribution Fund - the good causes fund - fell to 28 per cent of sales last year. This meant the sum it raised fell by £160m a year compared to the money raised between 1998 and 2002, when payments to good causes stood at more than 31 per cent of sales.

In his report's foreword, the Commission's chief executive, Mark Harris, said Camelot should be "applauded" for increasing sales by 0.9 per cent last year. But it would actually need to increase sales by 3 per cent each year, taking its income to £5bn a year, in order to reach that £10.6bn target figure. As a result, he warned, the Commission would keep a "close focus on this aspect of Camelot's performance over the coming years".

A Camelot spokeswoman said the company was still "confident" it would match or exceed the £10.6bn, and insisted its recent performance was proof that its recovery strategy was working. Sales were up 5.7 per cent in the first quarter of this year, compared with the same period last year - due to new games such as Euro Lotto and a triple rollover with Lotto. "Sales are extremely encouraging at the moment," she said.

Returns to good causes fluctuated naturally and were likely to improve, partly through new mobile phone games and lottery sales at supermarket checkouts, she said. "We accept that there are challenges going forward, but we're building on this," she added.