A new £200m fund to pay for children's holidays and youth groups is to be introduced in the biggest overhaul of the National Lottery since it was founded nine years ago.
Two reports published by the Government yesterday stated that the public should have a greater say in which good causes were funded, and that everyone receiving lottery money would have to display the crossed-fingers logo, as part of a facelift of the draw.
Tessa Jowell, the Culture Secretary, said ticket sales could drop further if the public did not see lottery cash going to good causes.
"It is now time to give the national lottery back to the people. A public which can't see how the lottery has benefited them, and don't understand how or why grant decisions are made, is a public that won't buy tickets," she said. "If they don't buy tickets we are limited in the good causes we benefit. That simple, vicious cycle is the absolute nub of the problem we face."
Camelot's monopoly on running the National Lottery will be removed and other companies will be allowed to run games, such as scratchcards. A new Young People's fund, with an initial budget of £200m to distribute, will channel lottery money to "children's groups and young people".
Grants of less than £500 will be made for the first time in a fast-track distribution system that "can be decided quickly and easily". An annual National Lottery day to promote the draw will be staged from next year, when the draw celebrates its tenth anniversary.
During the day, bodies that have received grants will have to open their doors to the public and athletes and musicians who received grants will have to offer free coaching to the public. There will also be a one-off super jackpot.
The Secretary of State confirmed that the two distribution bodies, the Community Fund and the New Opportunities Fund, would merge, forming a new body to distribute half of all lottery money.
The two reports published yesterday expressed the need for the public to be told of the "wide range of projects which are funded" by the lottery. They were issued after a campaign by the Daily Mail, which criticised grants to asylum and gay groups by the Community Fund.
"The Community Fund's grants of £336,000 to the National Coalition of Anti- Deportation Campaigns sparked considerable debate," one report said. "Lottery grants should be used for good causes, not for doctrinaire activities, and steps have been taken to ensure this, but that grant has to be considered in the context of some of the other grants they have made," it added.
Yesterday, a spokesman for the Community Fund said he was pleased that the Government had not caved in to pressure from right-wing groups to curb grants.
"We are pleased that the Secretary of State has recognised the importance of the diversity of what the voluntary sector does and from time to time there may be controversial funding decisions to be made," he said.
The government report says there is "widespread concern" that money raised by the lottery for good causes has not yet been distributed. A new Joint Promotional Unit, composed of government, Camelot and the lottery distributors, will work to restore public interest in the National Lottery.
Meanwhile, special lottery games are to be set up to help to fund Britain's Olympic bid. The lottery has raised more than £14bn for good causes from sales of more than £41bn.
OVERHAUL - THE KEY PROPOSALS
* Camelot to lose its monopoly and other companies to be brought in to run games such as scratchcards
* Local referendums to involve communities in deciding where lottery money goes
* Lottery logo to be displayed by grant recipients
* New scheme of 'micro grants' of less than £500 to be set up
* Annual National Lottery day with free coaching by sports stars who have received grants
* The Community Fund and the New Opportunities Fund, the lottery distributors, to merge
* New Young People's fund worth £200m
* New joint promotional unit to boost the lottery's image
* Expansion of the Awards for All programme with the size of small grants raised from £5,000 to £10,000Reuse content