Memorandum submitted by the Neighbourhood
Lottery Alliance
1. INTRODUCTION
1.1 Since its introduction in 1994, the National
Lottery has become a national institution. The regular weekly
draws have attracted a large number of players, generating substantial
monies for good causes and funding projects as diverse as linear
accelerator for cancer care, new sports facilities for members
of the UK Olympic Squad and a range of millennium projects.
1.2 This success is in no small part due to the
36,000 retail outlets who form the public face of the Lottery
and who facilitate, promote and market the means to play. The
Lottery has also proven to be an outstanding success for retail
outlets who are involved in lottery sales. Sales of scratchcards
and lottery tickets not only generate commission for the retailer,
but also attract increased footfall to the outlet and additional
impulse purchases. Indeed, in some cases, having a National Lottery
terminal has helped to save many neighbourhood retailers from
closure.
1.3 The Neighbourhood Lottery Alliance (NLA)
welcomes the opportunity to give written evidence to the House
of Commons Select Committee on Culture Media and Sport inquiry
into the operation of the National Lottery. With the identity
of the future operator of the National Lottery licence still to
be decided, and hence the future shape of the Lottery still somewhat
unclear, the inquiry is timely. The NLA very much hopes that the
Committee's inquiry will help to ensure that the transition to
the new licence is trouble-free and that the future regulation
is handled more effectively and smoothly.
2. THE NEIGHBOURHOOD
LOTTERY ALLIANCE
(NLA)
2.1 The NLA was formed in September 1999
with the sole purpose of representing collectively the views of
all neighbourhood retailers in respect of the awarding of a new
National Lottery licence 2001-08. The NLA established a good working
relationship with the National Lottery Commission and sought to
maintain close contact with all the bidders—including both
final bidders for the licence.
2.2 The NLA comprises four constituent organisations.
The Association of Convenience Stores (ACS) represents 23,000
independent and multiple neighbourhood stores trading as convenience
stores—usually over long hours and at the heart of communities.
Independent Retail News magazine (IRN) has a readership of 48,000
independent small stores, and raises key political issues with
its readers, as well as communicating business and product developments.
The National Federation of Retail Newsagents (NFRN) represents
22,500 independent news retailers. The Scottish Grocer's Federation
(SGF) represents 2,000 stores in Scotland—with these outlets
being either independent or part of small groups. Together these
groups represent all but a handful of the 60,000 neighbourhood
retailers in the UK.
2.3 The NLA is the voice of the Lottery
retailer. There are currently 25,000 National Lottery terminals
and 11,000 retail outlets selling only scratchcards. Around 70
per cent of existing National Lottery terminals are housed in
NLA member outlets, the majority of which will be operated by
independent retailers.[1]
The group represents an even greater proportion of the 11,000
retailers who sell only scratchcards.
2.4 The NLA believes it is vital that this
voice is reflected in public debate on the operation of the National
Lottery and decisions about its future development. We have therefore
provided evidence on those aspects of the Committee's inquiry
which have an impact on the retail network, and would welcome
the opportunity to give additional oral evidence.
3. PROMOTION
AND PUBLIC
IMAGE OF
THE LOTTERY
3.1 Neighbourhood retailers are the public
face of the National Lottery in the eyes of the player and their
customers. They are therefore not only crucial to its success
but also its future. Retailers not only provide access to the
National Lottery for local people who prefer to shop in the community,
or who do not have the means to shop elsewhere, they also actively
promote the Lottery amongst the playing public as part of their
total retail offer. Furthermore, it is retailers who receive the
complaints from players about operation of sales rather than the
operator themselves.
3.2 As a result, the image of the National
Lottery is inexorably linked in the eyes of the customer with
the quality of the point of sale offer. Retailers have invested
much time and attention in ensuring that National Lottery sales
are handled efficiently and professionally. Continued improvements
are required in communicating with retailers—especially
in support of the introduction of new games.
3.3 The NLA believes it should be incumbent
upon the National Lottery Operator to ensure that adequate staff
training materials, marketing and promotional support are also
available to support the retailer's own investment in establishing
a successful Lottery business.
3.4 Just as neighbourhood stores have supported
the National Lottery, so the National Lottery has been crucial
to the ongoing prosperity and viability of local stores. The five
per cent gross commission to retailers for National Lottery sales
have been crucial to the survival of many small stores who are
facing increasing pressures on their profitability and indeed
viability. These include the reduction of retailer margins on
news product, the increasingly fierce competition, large-scale
"bootlegging" of tobacco and alcohol—critical
product categories in many neighbourhood stores—and the
imposition of additional costs as a result of legislation. The
National Lottery remains a key component of many stores development
of a breadth of retail offer which has allowed their survival
and continued viability.
3.5 It is a matter of some concern, therefore
that the recent controversy surrounding the selection of the next
operator of the National Lottery licence and criticism of the
National Lottery regulators may damage the image of the National
Lottery and reflect on the thousands of neighbourhood retailers
who form an integral part of the network.
4. THE SELECTION
OF A
NEW OPERATOR
AND ITS
IMPLICATIONS
4.1 The process for selecting the next operator
of the National Lottery licence has been a source of some concern
and controversy over recent months. The NLA does not want to comment
on the decision itself or the merits of either bid, but we remain
concerned at the way in which the bids were reviewed and the ultimate
decision taken. We are particularly concerned that retailers and
their representatives remain ignorant of many of the key details
which will ensure a successful and smooth transition to the next
licence.
4.2 The NLA has established a good working
relationship with both the National Lottery Commission and the
bidders for the next licence. Opportunities were provided for
retailers to engage in public consultation throughout the process
and we were delighted that the importance of the retail network,
and neighbourhood stores within it, was recognised in the Invitation
to Apply.
4.3 The continued success of the National
Lottery will rely heavily on a seamless transition from one licence
to the next. Under the terms of the Invitation to Apply, the next
operator of the licence will be required to install new terminals
at the start of the licence period and the emphasis has been on
the introduction of new games to revitalise the Lottery's fortunes.
The NLA believed that the original timetable set for the announcement
of the operator from October 2001 allowed sufficient time for
an effective changeover to the next licence. The Commission's
failure to select an operator, firstly in June and then again
in August, has placed this in serious jeopardy. It has also caused
a great deal of confusion and uncertainty amongst retailers and
may cause some logistic difficulties in the long term.
4.4 Retailers' first concern is their current
ignorance over the likely shape of the retail network. While the
NLA welcomed both bidders' indications that the role of neighbourhood
retailers would be nurtured in the next licence period, there
is presently no confirmation of the role that these retailers
may play in the future of the National Lottery. The NLA is unaware
of any plans to grow the existing retail network, alter its balance
or de-select retailers during the course of the licence. The People's
Lottery has indicated that existing National Lottery retailers
will retain lottery terminals, but this assurance has only been
given for the start of the Lottery period. In the midst of speculation
over the retail network, rumours are circulating within the trade
over the actual selection criteria that the operator will use,
with speculation being that priority will be given to retailers
stocking other products supplied by bidders and their partners.
This speculation is unhelpful and has been caused entirely by
the delay in reaching a clear decision and publishing the successful
bidder's plans for the retail network.
4.5 Retailers are also concerned over the
plans for rolling out new terminals to existing or new lottery
retailers at the start of the new licence period. The logistics
of the changeover include making the staff who operate the National
Lottery aware of how new terminals work, and of the format of
any new games. Retailers are particularly concerned over the implications
for them of terminals not being installed and operational in some
or all stores from the very start of the next operating licence.
The operator is subject to significant fines if a draw is missed,
but retailers also suffer and are not currently given provision
for compensation for lost sales and custom.
4.6 The original timetable for the identification
of the next operator allowed fifteen months for the changeover,
and ample time to resolve these and many other operational difficulties.
Whilst the logistics of bringing about this changeover in less
time will be tackled by the operator and its partners, the NLA
is concerned that the potential impact of missed draws on retailers
is understood and addressed at an early stage. Retailers cannot
be adversely affected by the foreshortened changeover period.
4.7 In the light of the contracted timetable
for the changeover to the new National Lottery operating licence,
the NLA calls upon the Government to encourage the negotiation
of an interim licence with Camelot to run from the beginning of
October 2001 and for as long as will reasonably be required to
ensure a smooth changeover to the next full licence period.
4.8 The NLA also calls upon the Government
to review the way in which the National Lottery is regulated and
the legislation governing the selection of a new operator. Lessons
must be learnt from the way in which the process has been handled
and changes made to ensure that those affected by the decision
are more closely involved in discussions about the way in which
changes are to be effected.
5. METHODS OF
SALE OF
LOTTERY TICKETS
5.1 The NLA believes it is vital that all
those involved in the regulation, operation and scrutiny of the
National Lottery understand the importance of the retail network
to the success of the National Lottery, both in the past and in
the future. Investment in and support of the retail network will
be vital to ensuring that maximum funds are available to good
causes.
5.2 The Invitation to Apply for the next
lottery licence cites the importance of developing new and innovative
ways of engaging with the lottery and suggests that new technology
be exploited to encourage more and greater levels of play. The
NLA believes that the retail outlet should remain the principle
point of interaction between the public and the National Lottery.
5.3 The simplicity of the current online
games are crucial to its success. Emphasis should be placed on
the ability of staff in neighbourhood retail outlets to implement
the games effectively and quickly. It is vital that retailers
receive notification from the operator well in advance of the
introduction or termination of any new games or scratchcards so
that their outlets can be adjusted accordingly and the requisite
investment in staff training made.
6. ENFORCEMENT
OF THE
AGE LIMIT
FOR PURCHASE
OF LOTTERY
TICKETS
6.1 Neighbourhood retailers take their social
responsibilities very seriously and many have put in place stringent
measures to control access to age-restricted products. It is incumbent
on all those with a concern to see the smooth operation of the
National Lottery to support effective measures to prevent under-age
play, and the new operator and the Department for Culture, Media
and Sport should re-double their efforts in this regard.
6.2 The NLA believes that it is important
to take an integrated approach to matters relating to age-restricted
purchases rather than developing solutions specific to one type
of product. We support the idea of a National Proof of Age Card
available to all people aged between 12 and 26. Members of the
NLA[2]
have already invested considerable time and resource in the development
of CitizenCard, the not-for-profit pan-industry proof of age scheme
launched in February 1999. In the absence of a truly effective,
national proof of age card scheme it remains the best line of
defence for retailers against attempted under-age purchases.
6.3 The NLA welcomes the many developments,
CitizenCard prime among them, to produce a solution to the problem
of under-age purchases and proof of age. However, the launch of
a number of local and national schemes as well as the development
of the new photo driving licence and the proposed DfEE "Connexions
Card" has led to confusion among retailers about the validity
of various schemes. We therefore endorse calls by the House of
Commons Select Committee on Health in its inquiry on the health
risks of tobacco for the Government to endorse effective, national,
forge proof and multi-age proof of age card schemes and strongly
promote a "No Proof—No Sale" policy for all age
restricted products.
6.4 Only through concerted effort from all
interested parties—Government, schools, regulators and retailer
and suppliers of age-restricted products—can a culture develop
such as that in the United States where showing proof of age is
standard practice for even those comfortably old enough to purchase
that product. Such a change of culture is crucial in supporting
retailers in the fight against under age purchases.
6.5 A similarly integrated approach is required
for the enforcement of age-restricted sales through test purchasing.
At present there are guidelines from the Home Office in respect
of test purchasing for tobacco, and the Department of Health has
published a protocol for local authorities wishing to conduct
tobacco test purchasing. The current National Lottery operator
has a clearly stated process for test purchasing under its initiative
"Operation Child". However, decisions on the removal
and suspension of terminals are taken on the basis of test purchasing
results from local authorities who may follow no published guidance
on these operations.
6.6 The NLA believes that the purpose of
test purchasing should be to improve standards of retailing, rather
than simply to punish retailers for a single mistake that a retailer
or their staff has made. National guidelines for the test purchasing
of all age-restricted products would help retailers to develop
in-house training and carry out their own due diligence checks.
Preventing under-age purchases is extremely difficult for retailers,
and those who have difficulty in preventing a successful test
purchase by a minor—for any product—should be offered
training and support in preventing such purchases occurring again.
The NLA would wholeheartedly support the removal of a National
Lottery terminal (or prosecution in the case of other products)
in the event that a retailer repeatedly sold National Lottery
products to those too young to legally buy them.
6.7 The operator of the next National Lottery
licence is in a unique position whereby it can broker clear guidelines
across all age-restricted products, and set an example of best
practice in the re-training of retailers and staff who make mistakes
in selling to the under age. These guidelines should be developed
in conjunction with those who sell and police the sale of all
age-restricted products.
November 2000
1 The current National Lottery operator defines "independent"
accounts as all those retailers not trading nationally. Some smaller
multiples (with up to 100 stores) operating regionally would be
counted among the two-thirds of "independent" operators. Back
2
The Association of Convenience Stores and the National Federation
of Retail Newsagents. Back
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