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Camelot beats off rivals to win UK Lottery for next 12 years

Aug 9, 2007, 8:39 am

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UK National Lottery

The UK national lottery is to be run by incumbent operator Camelot for the next 12 years after the group persuaded regulators it was more likely to meet the funding demands of the London Olympics and other good causes than outsiders Sugal & Damani, an Indian conglomerate.

Camelot was selected as preferred bidder for the 10-year license, starting from 2009, even though the National Lottery Commission said some of the operator's projections — particularly its pledge of average yearly sales of £7.9bn — were described as "overly optimistic" by commissioners.

Sales last year rose from £4.9bn to £5bn, boosted in large part by controversial scratch-card games. They remain below levels of seven years ago.

It is not the first time lottery watchdogs have criticized Camelot's projections. During the bid process for the current license, the commission said Camelot's estimate of £15bn raised for good causes over seven years was also "overly optimistic". With less than two years to run, Camelot has so far raised £8.3bn and now targets £10.5bn.

At the heart of Camelot's bid is a bold proposal for a world lottery, a widening of the popular Euro Millions draw. Yesterday commissioners declined to be drawn on the likelihood of such a project materializing. Camelot said it would generate 100 millionaires every month. Industry insiders noted the regulators had been skeptical of Camelot's enthusiasm for a European lottery, which proved a huge success.

The bidding process has already been dismissed by some previous bidders as failing to offer a level competition. Sir Richard Branson and others have criticized the cost of bidding against Camelot, which has won both previous license bids. Camelot spent £20m on its bid. Sugal & Damani would only say it had spent "less than £20m".

Camelot takes 5p from every £1 spent on lottery tickets to cover its costs and profits. The group claims to be the most efficiently run lottery in Europe, returning just 0.5p to shareholders in profits. It has declined to reveal whether the 5p take will alter under its business plan for the third lottery license. Regulators found Camelot's plans to be marginally more cost-effective for good causes than those of Sugal & Damani.

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