Examination of Witnesses (Questions 20
THURSDAY 9 NOVEMBER 2000
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.
28. Have you given evidence to the Gambling
(Mr Holley) Yes; the answer is that we
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
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
39. Do you know how many? Have you done an investigation
(Ms Thompson) I do not. I do not have the figures
here in front of me.