Camelot reaps rewards for being quickest on the draw

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The Independent Online

David Rigg can squeeze in the Independent for 20 minutes, before an interview with Welsh radio. We are lucky: some days Mr Rigg, director of communications of Camelot, the National Lottery operator which today celebrates its first birthday, does as many as 20 radio interviews and nobody else can get a look in.

As we speak, an urgent message comes to ring Alan Yentob, controller of BBC1 and broadcaster of Saturday night's live lottery draw. "Tell him I'll call him back," drawled Mr Rigg, at once managing to make himself and the Independent seem more powerful than the BBC.

In Mr Rigg's case, that is not far from the truth. His weekly draw programme brings 11 million viewers to the BBC every Saturday night. Like the BBC's viewing figures, Camelot's winnings are guaranteed. When the totals are added up for the first year the lottery will have soldclose to pounds 5bn in on-line tickets and Instants scratchcards. Camelot's profits will be about 1 per cent, or pounds 50m.

For outspoken critics likeRichard Branson, whose own non-profit bid to run the game was rejected, it is an obscene amount. For Labour, too, it is likely to prove too much.

Not so Mr Rigg and Camelot. He receives a salary of about pounds 150,000 with more to come through the 50 per cent bonus due to all Camelot executives for launching the lottery on time, another 50 per cent for exceeding annual targets and a further 140 per cent under a long-term incentive scheme.

For Camelot, its shareholders and senior executives, the money does not rain down but pours. "Camelot put in the lowest bid," Mr Rigg said. "We charged less than the other competitors." Profits, he declared, are not excessive.

"That is an extraordinarily low figure, even for a high volume, low-risk business," he said. Even supermarkets, he argued, which are also low-risk, thanks to selling the bare necessities of life like food, do not have such a small margin.

But supermarkets have ongoing capital costs. Camelot, once the lottery was up and running, has had no such significant expenditure. A bank- credit line of pounds 75m has barely been touched since its launch.

Like supermarkets, said Mr Rigg, Camelot is operating in a competitive environment. But what sort of competition is it where one company has the licence? Camelot is a monopoly provider that cannot fail.

"That always amuses me," Mr Rigg said, not smiling. "Back in May 1994, when we won the licence and six months before launch, we said sales would peak at pounds 5.5bn giving total sales over the seven-year licence of pounds 32bn, with pounds 9bn going to good causes. The great majority of commentators said it was unachievable."

Camelot, he said, faced heavy penalties if it was late at launch. "I am not sympathetic to the view any fool could do it and it is money for old rope," he said. "Since we spend most time in this country moaning about great British cock-ups it is refreshing to have something that has gone spectacularly right."

While the public has taken to Camelot's product in such numbers that commentators were, as Mr Rigg rightly said, caught out, other factors have played a part in the company's success. Camelot was far quicker off the draw than anyone, including Oflot, the regulator, ever imagined. Machines have been installed at a faster rate than was envisaged in the licence award.

The advertising campaign, It Could Be You, has persuaded people to buy tickets because they feel they have as much chance as the next person rather than the realistic one in 14 million chance of winning.

All the press attention, including the much-hyped weekly draw, inevitably has focused on the big winners. Losers are never mentioned.

As Camelot's own prize figures, leaked to the Independent, show, they are drawn from the least-well-off groups of society. Socio-economic group DE - semi-skilled and unskilled manual workers, trainees, long-term unemployed - make up 29 per cent of the population, yet they account for 31 per cent of sales of Instants cards. C2s - skilled manual workers - and DEs, make up 53 per cent of the population yet account for 57 per cent of on-line and 56 per cent of Instants sales.