Convenience stores worry about the Lottery moving closer to digital sales channels

By Kate Northrop

Lottery retailers in the United Kingdom are expressing concerns about the future of the lottery in brick-and-mortar stores now that the contract for operating the lottery is up for grabs.

Camelot Group has run the National Lottery for nearly three decades. Now that the contract is up for renewal, local retailers worry that a new operator would mainly prioritize online sales and push out smaller stores.

Bidding for the contract opened last August with some prime contenders in the mix, including Europe's biggest lottery provider Allwyn as well as Northern & Shell, the operator of the Health Lottery. Other candidates are Sisal, the licensee of Italy's SuperEnalotto, and Sugal & Damani, India's largest lottery operator.

To get a pulse on how retailers currently view the current operator's performance, The Grocer, a British magazine devoted to grocery sales, surveyed 250 convenience stores that sell lottery products. The survey found that a third of convenience retailers are unsure about the prospect of a new license holder taking over, with 11.2% saying they're worried about change.

The survey also revealed a high approval rating of Camelot's management of the lottery, with the average satisfaction score being an 8.2 out of 10.

Currently, Camelot works with over 44,000 retailers in the UK, most of which are independent outlets. According to the operator, National Lottery retailers earn 5% commission for each draw-based game sold and 6% on each scratch-off ticket sold, as well as 1% on certain prizes paid out in-store.

The Grocer's survey also found that nearly half of convenience retailers (44%) say the National Lottery is more important than ever to their business, with mere months left until the Gambling Commission announces whether Camelot will hold on to the license for a fourth term.

Many retailers are worried that a new operator would promote online sales to the point where smaller businesses that rely on selling lottery products would get pushed out of the picture.

"Currently, the National Lottery does have an online presence, but I've heard that some of the bidders want to do a lot more online and from a high street point of view, and from the point of view of community-based retailing, we need to protect bricks and mortar," Deputy VP at the National Federation of Retailer Newsagents (NFRN) Jason Birks said. "Those in government need to not only view online as the 'trendy' thing to do but bear in mind that people still like to visit bricks and mortar retailing."

However, there were some respondents in the survey (5%) who said that they would welcome a change in lottery management, advocated for better support, and called for newer, more innovative products.

"I don't think Camelot deserves another license, as for the last few years they have been very average with limited innovation, mediocre support for retailers with too much red tape," a local retailer said to The Grocer. "A new licensee should create a fresh approach and more energy."

Finally, many other convenience stores were neutral or ambivalent about the change and thought that a contract with a new operator would have little impact on their business at the end of the day.

"The overwhelming majority of retailers were unsure or indifferent to the possibility of a new operator taking over the National Lottery license with a large proportion citing that the change makes no difference or that it doesn't matter highlighting the difficulties in changes to habits and ingrained behaviors," Lumina Intelligence Senior Insights Manager Katie Prowse stated.

Camelot conveyed that it aims to strike a balance between online and in-person sales channels to benefit all retailers while sustaining significant sales figures.

"We fundamentally believe that The National Lottery's success — which culminated in record sales last year — is reliant on building and maintaining a healthy retail channel," the operator said in a statement. "That's why we've invested heavily in retail at the same time as growing the largest digital lottery channel in the world by revenue.... While we're unable to share specific details of our bid, we can say that Camelot's philosophy remains the same — with retail being a cornerstone of our strategy. National Lottery retailers have been fantastic partners to us over the past 27 years, and, as they've always been there for us, they can expect our continued support."