Select Committee on Culture, Media and Sport Minutes of Evidence

Examination of Witnesses (Questions 20 - 39)



  20. Could that happen?
  (Sir George Russell) It could happen very easily.

  21. Has it happened elsewhere in the world?
  (Sir George Russell) Yes.
  (Mr Holley) It is inevitable that you have profit made in the chain because in the whole set-up of the National Lottery you have lots and lots of suppliers to an operator and you have retailers and they all expect to make profit. The only question that has really been debated is whether the operator who is licensed by the Government should make a profit.

  22. In the letter we received recently you stated that the National Lottery provides "a significant boost to the income of ... independent retailers". How do you intend to maintain the current level of lottery business for those retailers once new technology allows players to buy tickets remotely? Is that all in your phase?
  (Ms Thompson) Yes. In the bid submission we did actually talk about going into new technologies, interactive television, mobile telephones and sales on the Internet.

  23. Have you not gone into that already?
  (Ms Thompson) No.

  24. Not at all?
  (Ms Thompson) No. We only sell through retailers and through paper-based subscriptions at the moment. What we are forecasting in the next licence is that we would return about £15 billion for the good causes and therefore the retailer estate would actually for the next seven years of the licence be protected because their income levels remain very much the same. You are absolutely right, the average retailer's commission is just over £8,000 and for a lot of our small independents that is an absolute lifeline. During the next seven-year licence period, they would not be affected very much at all, but beyond that there will obviously be impact.

  25. From what I have seen so far you have been very efficient but is it continuing? Is it a common problem with lotteries that people after a time lose interest, the players lose interest? Does that compare with anywhere else in the world? Is it a normal thing that it tails off? Is that why you are introducing the new games?

  (Ms Thompson) Yes. Absolutely. It is the same with any consumer product, not only lotteries. One of the myths around about lotteries is that lotteries grow in a straight line and that in fact is absolutely not true. What happens is you launch a game, it builds to a peak because lots of people come in and try it. Then a few people find it is not for them; they play a few weeks, they do not win anything so they drop out. Then you need to refresh it and put in another new game. That is exactly what has happened over the course of the six-year licence so far here in the UK and precisely why we have launched the two new games we announced yesterday.

  26. How do you guard? Are the two games we were talking about before not really geared to the compulsive gambler or even the under-age one?

  (Ms Thompson) We have a game design protocol which actually tests games very specifically against three areas: against under-16s, low income groups and those with compulsive gaming tendencies. Any game we design which looks as though it would have more appeal than normal benchmarks against any of those groups would either be redefined, redesigned or scrapped and we would go for another one. The reality about compulsive gambling is that very few compulsive gamblers actually play the Lottery. The reason people become compulsive gamblers is because they like the excitement of the continual betting. It is very difficult to do that when you have just two draws a week and you have to wait three days behind it. It is something we take very seriously. We are a company which operates to the highest standards of social responsibility. For the last three years we have part sponsored Gamcare, which is a gaming help organisation and funded a helpline there. We do know that of all the calls they take on their helpline less than two per cent are coming from people who play National Lottery products. It is something we are very aware of and are very conscious about.

  27. What percentage are pensioners who buy Lottery tickets? They will have a bit more money soon. What percentage do you reckon you have who play?

  (Ms Thompson) In terms of the age groups we have very detailed statistics by all our various games. At the moment about 13 per cent of the population is over 65 and about 10 per cent of our players, so it is slightly skewed against pensioners at the moment.

Mrs Golding

  28. Have you given evidence to the Gambling Review Body?

  (Mr Holley) Yes; the answer is that we do.

  29. Can you tell me whether you were in favour of one regulating body for gambling?
  (Mr Holley) The answer is that we think that is a matter for others to say, but we can see a lot of benefits if that were to be the case. What happens at the moment, if you look at the gaming market, is that 12 per cent of the ticket sales in the gaming market are accounted for by the National Lottery but it contributes 58 per cent of the proceeds to government and government-designated causes. We have said for a long time that there is a case for looking at that market as one market.

  30. Do you think that other organisations like the pools and bingo should be allowed to advertise on television?
  (Mr Holley) I do not think that is for us to comment on.

  31. I am just asking your opinion.
  (Mr Holley) I have no objection if they do.

  32. If they do, do you think that there will be a conflict? If you get the licence you will be allowed substantial free access to television to advertise your wares whereas they are going to have to pay for theirs.
  (Mr Holley) When we advertise on television we have to pay for that.

  33. Obviously you get enormous benefit from the programmes which go out on television.
  (Mr Holley) The National Lottery clearly gets benefit from the draw shows on the BBC.

  34. Do you have to pay for that?
  (Mr Holley) No, we do not.

  35. You do not pay for that at all.
  (Mr Holley) No, we do not.

  36. If other organisations were allowed to advertise, do you think that there should be a level playing field where you should pay much more for a programme, that that should be part of the Lottery running?
  (Mr Holley) You have to look at the playing field in all sorts of ways. That is one. I mentioned the amount of money which goes from the Lottery to good causes and government, much, much more than it does from the pools for example. There is an example where the playing field is not level in the other way. I think you have to look at the whole balance.

  37. We have had evidence from Littlewoods who state that scratchcard prizes are subsidised by the main online game. Does that not give you an unfair advantage in the scratchcard market and reduce the sales of other scratchcards? Is that fair?
  (Ms Thompson) On scratchcards, it is absolutely right that we built the market and before National Lottery Instants were launched the market was worth £40 million a year. We ourselves currently are about £560 million, so we totally transformed that market. They were a very, very small player in there anyway. One of the problems we have is the amount of money that we can give back in prizes, partly because that is a decision for our regulator but also because of the amount of money which goes back to the Government and good causes, 41 per cent in total. It makes it far more difficult to give players higher levels of prizes. The other problem we have had is that our regulators felt very strongly that we should follow not lead this market. We have not had some of the marketing opportunities open to us that people like Littlewoods have.

  38. Many of the charities tell us that they relied on scratchcards and that the Lottery has virtually destroyed the money they raised for the charities. Is that right?
  (Ms Thompson) We have evidence which would say that is not true for all charities. There may be some very specific charities where that has happened but certainly some charities have found that their sales of scratchcards have increased because of the marketing and publicity we have actually given to the scratchcard market. By actually building the market from what was £40 million a year to, at its peak, somewhere of the order of £800 million, that has actually brought a lot more people into the game playing scratchcards. Some charity scratchcards have actually benefited.

  39. Do you know how many? Have you done an investigation into it?
  (Ms Thompson) I do not. I do not have the figures here in front of me.

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