Camelot accused over £5bn Lottery funding shortfall

Falling ticket sales cast shadow over future schemes

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Leading article: The National Lottery would benefit from competition

Camelot has a £5bn shortfall in its contributions to good causes because the structure of its licence affected its incentive to sell tickets, a lottery expert claimed yesterday.

Professor Ian Walker, of the University of Warwick, said Camelot had taken a higher percentage of sales at the start of its first licence but that dropped off towards the end. In the new, seven-year licence it was handed yesterday, Camelot took a higher percentage of sales at the end than at the beginning, meaning it was now at the point in the two licences when it had the least incentive to sell tickets.

Lord Burns, the Lottery Commission chairman, said yesterday Camelot was likely to raise only £10bn rather than the £15bn promised by Camelot because sales of lottery tickets were continuing to fall.

Lord Burns said falling sales was an international trend which the British operators would be unlikely to break.

However, Professor Walker said it was not true that sales of lotteries inevitably tailed off, as the Irish lottery had shown a steady increase and it was four years older than Britain's. Dennis Vaughan, chief executive of the Lottery Promotion Company, which campaigned for the introduction of a lottery, said the performance of the New York lottery showed sales they could be turned around.

Lord Burns, speaking to more than 400 charity representatives at the Lottery Monitor Conference in London, said the commission had never expected that Camelot would be able to achieve the £15bn for good causes it had promised. If sales remained at about £5bn a year, the figure would be more like £10bn.

"International experience suggests that lotteries' sales decline after their initial life-span and there is more competition to the National Lottery now from other gaming markets," he said.

Robert Blow, a spokesman for the Community Fund which distributes lottery money, said although it would mean fewer charities and voluntary groups being helped, there was little that could be done to stop the trend. "We are dependent on how much Camelot can make from the game, but this is historically what happens with lotteries – there is initial interest but then people lose interest."

Camelot revealed last month that ticket sales fell below £5bn a year last year for the first time in four years, which it blamed on increased competition and its bitter battle with Sir Richard Branson for the new licence.

A Camelot spokeswoman said sales would be further hit by the Government's gambling review and the removal of betting duty.