No hard-luck story: fortune is favouring the lottery

We ran an article last week pointing to problems at Camelot. Here, chief executive Dianne Thompson counters that the good times are rolling for sales and good causes

The analysis of the National Lottery's sales performance in The Independent on Sunday last week was written by a depressed-sounding Mark Slattery, who used to work for Camelot's regulator, the National Lottery Commission. He described a bleak future of falling lottery sales and declining income to good causes, with apparently little or no chance of Camelot being able to stem a rising tide of lottery fatigue.

The analysis of the National Lottery's sales performance in The Independent on Sunday last week was written by a depressed-sounding Mark Slattery, who used to work for Camelot's regulator, the National Lottery Commission. He described a bleak future of falling lottery sales and declining income to good causes, with apparently little or no chance of Camelot being able to stem a rising tide of lottery fatigue.

Four days later, Camelot announced that the lottery-playing public - 70 per cent of the adult population - have raised no less than £16bn for good causes since 1994. That's the equivalent of the entire GDP of Luxembourg. We also released our July sales figures, which showed a rise of 6.7 per cent year on year.

In fact, lottery sales have been growing for 15 months, rising 5.7 per cent in the first quarter of this year and by 1 per cent in the previous financial year. Taken collectively, this represents the lottery's best sales performance for seven years.

So why the apparent discrepancy between Mr Slattery's tale of gloom and Camelot's excellent run of figures on sales and returns to good causes? What is driving our current performance? And how can we maintain the momentum of the past two years?

The answer to these questions can in part be found in the experience of lotteries around the world. Most have consistently launched to enormous public excitement and a consequent surge in sales. Britain was no exception: the rise in excitement and sales was even more spectacular here than anywhere else in the world.

When tickets first went on sale in November 1994, we had already generated 99 per cent public awareness of the lottery. Our first double rollover in January 1996 saw nine out of 10 adults buy a ticket. And in our first 18 months we went from a standing start to annualised ticket sales of more than £5bn. It was the most successful consumer product launch in Britain during that entire decade.

However, most lotteries also witness a gentle decline in sales as the initial public excitement dies down. Again, Britain was no exception. We sold £48m of lottery tickets a week in 1994, rising to a peak of over £100m a week in 1997. Since that time, total sales have settled to around £85m a week - nearly twice the level when we first launched.

What marks out a healthy lottery is whether or not this decline from the post-launch "peak" can be reversed. Our sales over the past 16 months would suggest that it can.

The key driver of this contemporary success has been the launch of smaller lottery games - diversification.

It is also true that scratchcards and Thunderball are our most successful non-Lotto games, ranking second and third respectively in the league table of UK consumer products. Lotto remains the top-ranked consumer product in the UK. But just because Lotto Hotpicks, Daily Play and EuroMillions have smaller total sales does not mean they are not successful. All are ranked in the top 20 most successful consumer products in the country and have brought in incremental revenue to good causes.

Taken together, our non-Lotto games now generate sales of more than £1.3bn a year and continue to register double-digit growth. So much for "customer confusion".

But the real story of Camelot's contemporary success, and what underpins our strategy for growth in the future, is more complex.

It's not about doing one thing 100 per cent better, but doing 100 things 1 per cent better. That's a more challenging task.

This has meant re-examining everything we do. From the roll-out of the largest ISDN network in Europe, to increasing the speed and volume of our transactions, to the introduction of new lottery terminals. From improved scratchcard terms for our retailers, to improved point of sale for our 30,500 retailers. And from the launch of Lotto on the internet and interactive television to our planned launch on mobile phones and at super- market checkouts later this year.

Most of this is not headline-grabbing stuff. But our radically improved sales performance owes much to these initiatives.

We have also executed a quiet revolution in our communications. Over the past 18 months, we have conducted a highly successful marketing campaign that promotes the link between playing the lottery and the huge number of good causes that benefit. Our next campaign will focus on the idea of "Lady Luck" and is intended to bring humour and a lightness of touch that should always surround the lottery.

We have also nurtured the link with good causes, establishing with the Government and the lottery distributors a National Lottery Promotions Unit, and funding the rollout of 10,000 "lottery funded" blue plaques. Both initiatives are designed to improve public understanding of where the £16bn of lottery money has gone.

It is quite true that operating the National Lottery and maintaining sales growth in the long term is no easy task. But we relish the challenge and acknowledge its importance.