Who can top Camelot?

The Lottery operator looks well placed to retain its licence, writes Dan Gledhill
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The Independent Online
Running a lottery is a serious business; nothing is left to chance. So it would seem, judging by the expressions of the 400 or so delegates who gathered last week at La Fleur's Lottery World Symposium in Washington.

The fanfare and pizzazz traditionally associated with the UK's National Lottery were absent from the annual conference, where operators, regulators and suppliers from around the globe gather. Instead, earnest-looking men and women in sombre suits stood in huddles, discussing the regulatory and legal issues affecting a industry which every year gathers pounds 80bn in revenue worldwide.

Camelot - the consortium of De La Rue, Cadbury Schweppes, ICL and Racal that runs the UK's National Lottery - was represented by its finance director, Peter Murphy. Also present was an envoy from the National Lottery Commission, the five-strong panel that will decide whether Camelot's tenure should be extended - luckily for Camelot, perhaps, because the other delegates were united in their admiration for the British operator.

Bruce La Fleur, vice-president of La Fleur's Lottery World magazine, says: "My experience of them is that they are obsessively dedicated to running the best lottery in the world. The rest of the world's lotteries have looked at the UK and been very impressed."

Rival operators may cast envious glances at the efficiency of an organisation that will have generated pounds 10bn for good causes by the time its contract expires. La Fleur magazine has voted Camelot's the first or second best- run lottery in the world for the last three years.

Like Manchester United, however, Camelot finds the hardest sceptics to win over are the ones in its own back yard.

Sue Fisher, for one, is distinctly unimpressed. Plymouth University's director for research into the social effects of gambling, she has surveyed 10,000 children aged between 12 and 15 to gauge the lottery's impact.

Her research suggests that in the five years since its inception the lottery has increased the incidence problem gambling in that age group by about 18 per cent.

The Commission and Camelot both maintain that average spending per person on the lottery is low in the UK relative to abroad, but Ms Fisher is not convinced.

"I am concerned that the average figures conceal some very high participation rates at the margin," she says. "After all, most people have a social drink but it is the drinkers at the extreme who are the problem."

Camelot has become accustomed to bad publicity over here. Its reputation reached a nadir in 1998, when GTech, the American lottery specialist, resigned from the consortium after its head, Guy Snowden, lost a libel action with Richard Branson. The Virgin founder has been a constant thorn in Camelot's side, but it is not clear whether or not he will attempt to win the licence this time around.

In July, the Commission will announce the principles that will be used to assess rival bids for the new contract. The Government has indicated its preference for a not-for-profit operation this time; it was Mr Branson who made such a proposal last time.

Mr Murphy at Camelot admits: "A lottery run on a not-for-profit basis would probably put us off bidding."

Demands for such an altruistic operation have in part been prompted by the fantastic returns made by Camelot members. Cadbury Schweppes, for example, put in a pounds 10m initial investment and now generates profits in excess of that figure every year. Most observers felt that Cadbury only went into Camelot as a hedge, to ensure that it could procure some compensation when consumers decided to buy lottery tickets rather than confectionery as they waited in supermarket queues. As it turned out, sales of its chocolate have held firm but the lottery has been such a money-spinner that Cadbury appears determined to continue.

The lottery has also been a godsend for De La Rue during an otherwise miserable five-year period when its other businesses have suffered and its share price has more than halved.

However, La Fleur disagrees with allegations of profiteering, pointing out that the profits taken home by Camelot account only for about 1 per cent of its turnover, a tiny figure compared with what foreign operators tend to take out.

La Fleur is also sceptical about the prospect of a not-for-profit lottery matching Camelot's contribution to good causes. "I don't think a not-for- profit lottery will produce higher sales," he says. "I just don't think they have the incentive to be as efficient."

In his experience, the best-run operations tend to be those in private hands, such as the lotteries in Australia and Austria.

If Camelot has a problem - assuming it can shrug off allegations that it has made hay by encouraging wanton gambling - it is the danger that the UK is suffering from a terminal bout of lottery fatigue. Results for 1998, published last month, showed the consortium's first drop in profits since its inception. Hence the importance of Thunderball, the low-odds game first played last night.

La Fleur is not concerned. He believes Britain's National Lottery is going through a "sophomore slump" - American slang derived from a college student who follows up a strong first year with a mediocre second.

The other groups interested in running the lottery appear to have grasped that circumstances will be more difficult this time. In 1994, pound signs flashing before their eyes, eight bidders vied for the licence that Camelot ultimately won. This time, the field will be much smaller. Leisure groups Hilton (formerly Ladbroke) and Rank are probably non-runners - both admit privately that they could hardly better Camelot's performance. The Post Office is also thought to be keen to hitch a ride with the incumbent rather than bid on its own. Littlewoods remains a possibility, but the delegates at la Fleur's conference expect to be paying tribute to the knights of Camelot for years to come.