It's a Lottery - but Camelot has earned its dosh

The public feels it is OK to make a fortune from playing a lottery, but immoral to do so by running one

Try as I may, I cannot join in the universal outrage over massive pay rises for the directors of the National Lottery operator, Camelot. Pay them the dosh, I say, they are entitled to it. And I am not being ironic. Yes, donations by the Lottery to good causes fell by pounds 143m last year, but the bonus that has netted its chief executive Tim Holley an increase from pounds 385,000 to pounds 590,000 a year was, under the terms of the contract that Camelot signed with the Government, linked to the company's performance in the preceding year, which raked in much higher amounts.

That contract was designed to maximise the amounts of money the lottery raised. The government wanted this because payments to the so-called "good causes" in many cases are substitutes for amounts that previously came from the public purse. And as well as saving on public spending, it also brings in extra taxes. To date pounds 1.4bn has gone into the coffers of the Treasury, in addition to the pounds 3.6bn saved in donations to good causes. In order that it should yield such huge sums, the Government set performance targets for the first three years of lottery operation, and the Camelot bosses have met them.

That's the way the private sector works. Directors can pay themselves whatever the market will bear and their shareholders will tolerate. Camelot's shareholders - all large, quoted companies such as De La Rue, Cadbury Schweppes, ICL and Racal, for there are no individual small shareholders in Camelot - presumably are quite happy with the situation. And individuals who hold shares in Cadbury etc must be happy too, having benefited from higher dividends as a result of their share in the Lottery booty. All shall have prizes.

Indignation at the whopping pay increases - Camelot's communications director David Rigg got a 90 per cent rise, from pounds 175,000 to pounds 333,000 a year - is based on the insistence that the Lottery isn't really part of the private sector. Rather, as a government monopoly administered by a private sector company, it is seen as a hybrid, which must remain sensitive to political considerations.

It is precisely this hybrid state of affairs that prompted free-marketeers to insist, when the Lottery was launched, that there should be no monopoly. Instead they wanted to allow as many lotteries as the public would support. Then there could be no public utility-style "fat cat pay rows", because the lottery sector would be genuinely open to competition.

The trouble with that, as even a party as ideological as the Tories could see, was that it would raise a lot less money. In lotteries, size matters. It is massive prizes that attract punters. So does a slot on prime-time TV (Camelot said yesterday that it wanted a third one, to boost scratch card sales) and you couldn't justify that for every draw in a market free- for all.

Of course, the whole enterprise is shot through with rank hypocrisy. It is unclear why the British public feels that it is OK to make a fortune from playing a lottery, but somehow immoral to do so by running one. Here "good causes" are usually dragged into the argument. But, overall, the Lottery has undermined the charitable sector - money from flag days, street collections and raffles are all notably down since it began. And if we did have a free market in lotteries you could safely put a quid on the fact that the Provincial Theatres Lottery, the Disabled Sports Lottery and the Third World Landmines Lottery would be swiftly put out of business by the Sod-the-Good-Causes-Here's-the-Big-Prizes Lottery.

Good causes are a fig-leaf. They salve consciences that might prickle at the naked truth that the National Lottery is an enterprise predicated on greed. And a particularly glib kind of greed, as was acknowledged by Mrs Thatcher, who refused to introduce it when she was prime minister, saying it would sap initiative and promote a something-for-nothing culture.

Her successors ignored that and plumped for a loads-of-money lottery run by private enterprise with target-oriented bonuses to maximise profits. New Labour, like the new climate that has brought it in, does not approve. It wants a non-profit lottery when the Camelot contract runs out, if not sooner. "This is the people's lottery and the money raised from it should reflect the people's priorities," said a sanctimonious statement from Downing Street.

The result will probably be a state-run lottery that is less ruthlessly efficient and therefore brings in less cash. Whatever reforms are introduced to the allocation of lottery cash, the decisions will rest with a body that is inevitably less able to work out the "people's priorities" than the straightforward mechanism of letting them give direct to the charities they approve of. More than that, it will rest upon the same impulses as those that have brought Mr Holley and his fellows their gargantuan pay rises: an elevation of the human craving to grab as much as we can for as little effort as possible.

Let them take the money, and if it helps discredit the whole fetid lottery concept, then so much the better. Saturday's pounds 12.3m National Lottery jackpot winner went into hiding yesterday, on the first day of his new life as a multi-millionaire. Camelot said he and his family had gone on holiday and would not be returning to their three-bedroom terraced home in Mossley Hill, Liverpool, outside which a 19-year-old model yesterday posed topless holding Lottery tickets for press photographers.

When I want to give to good causes I will choose them myself, thank you. When I want to gamble I will look for something with far better odds. And in the unlikely event that I ever won, I would not want to win something that sent me scuttling off into hiding from my past.