MEMORANDUM SUBMITTED BY THE NATIONAL LOTTERY
COMMISSION
1. THE SELECTION
OF A
NEW OPERATOR
FOR THE
NATIONAL LOTTERY
AND ITS
IMPLICATIONS
1.1 The Commission recognised when it took
over from OFLOT in April 1999 that it had to start quickly on
the process of selecting the holder of the next licence to operate
the National Lottery. As part of efforts to promote competition,
it encouraged those who had an initial interest to approach it
in May 1999 and made known its availability for discussions. The
expiry of Camelot's licence in September 2001 meant that it had
to balance the need to allow possible bidders time to prepare
proposals with giving a possible new operator sufficient time
to prepare its launch.
1.2 A Statement of Main Principles (Annex
A[1])
issued in July set out in broad terms the timetable, process and
principles that the Commission intended to adopt. A full draft
of an Invitation to Apply and a first draft of a new Section 5
licence were issued in September. The Commission held an open
bidders' and suppliers' conference in October 1999 which enabled
prospective bidders and others to ask questions about the details
of the Invitation to Apply and the draft licence. The Commission
was able in this way to take account of views of prospective bidders
and main suppliers in the final Invitation to Apply and the revised
draft licence that it issued in November 1999. These documents
formally opened the bidding process and required bids to be submitted
by no later than 29 February 2000.
1.3 The Commission engaged appropriate consultancy
expertise both for the initial stages described above and for
the subsequent evaluation of bids. It proceeded in both cases
through competition. After publishing a notice in the Official
Journal of the European Communities in August 1999, it appointed
consultants in December 1999 for the evaluation in the areas of
accountancy and finance, economics and IT systems and security.
It appointed marketing consultants in February 2000. By withdrawing
a small number of staff from day-to-day contact with the incumbent
licensee, the Commission was able to draw on their experience
for the purposes of the evaluation as a whole. Some other members
of the Commission's staff also contributed in respect of particular
sections of the bids. The work to establish that the bidders,
their suppliers and key employees were fit and proper persons
to run the National Lottery was done by a separate team that was
not involved in the main evaluation. The Commission took legal
advice from Lawrence Graham, who had been re-engaged in August
1999 after a competitive process, and, on public law matters,
from Treasury Solicitor's Department. Counsel's opinion was obtained
at the relevant stages.
1.4 The basis of the evaluation was set
out in the Invitation to Apply (Annex B*). The Commission had
by law to satisfy itself about player protection and propriety
and, subject to those concerns, to maximise the proceeds for the
National Lottery Distribution Fund. It proceeded then to assess
the bidders' organisational and financial capacity and how their
proposals met key outcomes set out in the Invitation to Apply.
The process was based on the methods used in 1994. The National
Audit Office had found then those methods were "comprehensive,
consistent, logical and properly controlled" and that they
"produced the best possible result for the Distribution Fund".
1.5 After preparing initial high level summaries
of the bids, the evaluation team undertook a series of "subject
reviews" that were similar to the "tasks" undertaken
in 1994. The Commission put several sets of written questions
to the bidders and invited each to make both a preliminary presentation
and a second one lasting a full day. There was also a demonstration
by each bidder of terminals and other player interfaces.
1.6 A team of three Commissioners, accompanied
by two staff members and a specialist IT consultant, made site
visits to Camelot and to four lotteries in the United States and
one in Norway. The sites were selected after consultation with
the bidders to enable the Commission to hold discussions with
bodies having responsibility for lotteries and using the respective
software system suppliers. The overseas lotteries visited all
had recent experience of conversions from one systems supplier
to another or of upgrade of systems and terminals without a change
of systems supplier. There was also a technical meeting in relation
to each bid, attended by Commissioners, at a site chosen by the
respective bidder in consultation with its main suppliers.
1.7 The Commission acted throughout in ways
designed to ensure a level playing field, before and after bids
were submitted. Examples included:
(a) allowing for a period of 15 months between
the planned announcement of a preferred bidder in June 2000 and
the commencement of the new licence in October 2001;
(b) requiring the bidders to provide new
terminals from the start of the new licence, which neutralised
a significant advantage for the incumbent;
(c) agreeing with Camelot on ways to enable
prospective bidders to have access to current retailers' names;
(d) providing significant amounts of other
information to prospective bidders; and
(e) negotiating with Camelot on arrangements
for dealing with the failure of the current licence to deal with
a possible handover to a new licensee, including the promise of
full and professional co-operation.
1.8 During the very detailed evaluation
process it became clear that neither bid met the minimum requirements
and that there was scope for improvement in parts of both bids
that were not sufficiently clear or robust or where the Commission
did not regard them as providing the level of confidence that
it required. The Commission invited both bidders to separate briefing
sessions, giving them written feedback and asked them to make
the necessary improvements. Following submission of additional
information from the bidders, the Commission's evaluation work
concluded that both bids still contained fundamental deficiencies
that prevented them from meeting the minimum statutory requirements.
1.9 The Commission decided in August 2000,
after considering the improvements made to the bids, that in the
light of its statutory duties it could not accept either of them.
Having taken legal advice on how to proceed, the Commission then
negotiated exclusively with The People's Lottery on rectifications
to its bid and on a draft licence and pre-licence agreement. However,
negotiating in this way with a single bidder was found on judicial
review to be unlawful. The Commission did not appeal against the
judgement because to do so would have prolonged the uncertainty.
The Commission had expected, if the negotiations with The People's
Lottery were concluded satisfactorily, to provide the gap of 12
months from the announcement of the winning bid to the start of
the new licence that the new bidder had regarded as essential.
The Commission recognises that, with the requirement following
the judicial review to negotiate also with Camelot, it may need,
in order to secure the 12-month gap, to grant Camelot an interim
licence after the present licence expires. Camelot undertook to
the court at the time of the judicial review that it would use
its best endeavours to accept such an interim licence. It has
since re-affirmed this undertaking to the Commission and negotiations
on the terms of such a licence, should it be required, are now
underway.
1.10 Although the Commission found in August
that the sales forecasts of both bidders were optimistic, the
process of competition will have benefited the Good Causes in
terms of the proceeds available for distribution. It has encouraged
the bidders to develop new ideas. The granting of an interim licence,
which Camelot has undertaken to use its best endeavours to accept,
will ensure that there is no interruption in the running of the
National Lottery.
2. METHODS OF
SALE OF
LOTTERY TICKETS
Channels of Sale
2.1 The majority of National Lottery tickets
(99.9 per cent) are sold through the retail network that was established
by the operator.
2.2 The remaining 0.1 per cent of sales
are accounted for by a subscription service which provides for
the purchase of online tickets by post, with options for the Saturday
and/or Wednesday draws, for periods of 13, 26 or 52 weeks, and
for one to seven sets of numbers.
Numbers of Outlets
2.3 There are two types of Lottery terminal—the
Online Terminal (OLT) sells both online draw ticket and Instants
scratchcard tickets and the Game Validation Terminal (GVT) sells
only Instants scratchcards (launched in March 1995).
2.4 At the launch of the Lottery in November
1994 some 10,000 outlets with OLTs had been established—with
a minimum of one outlet in each local authority area to ensure
national distribution. By the end of 1996, numbers had increased
to some 25,000 OLTs and 11,000 GVTs, which is the size of the
retail estate today. The number of outlets maintained by the operator
is a licence requirement.
Outlet Criteria
2.5 Demand from retailers to receive a Lottery
terminal was, understandably, higher than the number which the
operator thought appropriate. Outlets were chosen by the operator
according to the following minimum criteria:
(a) shop size greater than 750 sq ft;
(b) more than 750 customers a day;
(c) open 9 am to 5 pm, five days a week;
(d) open to 7 pm on Saturdays and Wednesdays;
and
(e) enthusiasm for the Lottery.
2.6 The relationship between the operator
and retailers is a contractual one. The responsibility for selecting
the location of National Lottery retailers lies with the operator.
It is not within the Commission's legislative remit to assume
such a role. There are advantages in this arrangement, since the
operator has knowledge of the commercial environment in local
areas. The Commission is not in a position to judge the siting
of outlets to maximise player access and sales. Terminals also
have costs which are borne by the operator, so inevitably a commercial
decision has to be made. Our interest is in ensuring this decision
is made in a manner that maximises the returns to the Good Causes,
and protects the reputation of the National Lottery.
2.7 That said, however, the Commission is
committed to maintaining ease of player access, as part of its
duty to ensure the National Lottery is run in a manner consistent
with its statutory duties.
Outlet type breakdown
2.8 Some 65 per cent of total outlets are
independently owned and 35 per cent are owned by groups.
2.9 Post Offices have the largest number
of Lottery terminals (OLTs and GVTs combined) with 9,600 outlets,
followed by CTNs (confectioners, tobacconists and newsagents)
with 9,000, convenience stores with 8,000 and supermarkets with
3,600—these four categories representing over 80 per cent
of outlets.
2.10 Supermarkets enjoy the largest sales,
with 10 per cent of total outlets generating 20 per cent of sales.
2.11 On average, weekly OLT sales per retailer
amount to some £3,500 and GVT sales are £120.
Regional Breakdown
2.12 Outlet sales by region are broadly
in line with population, attesting to the ubiquitous and national
appeal of the Lottery.
Potential Channels
2.13 Tickets are not currently available
for sale on the Internet, although this is expected to become
a feature of the next licence once the necessary safeguards on
prevention of under-age play, excessive play, financial security
and other issues have been resolved.
3. STRUCTURE
OF LOTTERY
PRIZES
General
3.1 Approximately 47 per cent of overall Lottery
revenue is distributed in prizes to players, with the remainder
going to Good Causes (30 per cent), Lottery Duty (12 per cent),
retailer commission (5 per cent) and to the operator to cover
costs and profits (6 per cent).
3.2 The level of prizes are determined by
game, with regard to the necessary attractiveness required to
motivate players (eg level of top prize, level of lowest prize,
number of prize levels). Prize structures are determined by the
operator by considering international benchmarks and by conducting
specific market research to test the relative attractiveness of
alternative options. The overall payout of the Lottery therefore
depends on the relative sales achieved by each game.
3.3 Prize structures can be parimutuel,
with a specified percentage of the prize pool being allocated
to each prize tier (eg the main online game), have fixed prizes
(eg Thunderball and Big Draw), or for scratchcards be previously
determined and randomly distributed during the printing process.
3.4 All prizes are paid in cash and with
no immediate tax liability. Most foreign jurisdictions advertise
an online jackpot prize based upon an annuity amount and have
only recently provided the option to convert that to a present-day
cash value.
3.5 Information on each game is given below.
Main online draw
3.6 Tickets are £1 for each line (set
of six numbers) for each draw:
(a) Draws take place on a Saturday and Wednesday.
(b) Players either choose six numbers from
a choice of 49 (80 per cent tickets) or choose a "Lucky Dip"
with the terminal randomly allocating six numbers (20 per cent
sales).
(c) Overall odds of winning are one in 54.
(d) Prizes amount to 45 per cent of ticket
sales.
(e) Prizes are parimutuel, with the prize
pool after payment of the £10 winners being allocated by
tier according to the following table. The size of the win is
then determined by dividing the total tier amount by the number
of winning tickets:
| Match | Odds (1 in)
| Prize Pool | Average Prize*
|
| Match 6 (Jackpot) | 13,983,816
| 52 per cent | £4,906,330
|
| Match 5 + Bonus ball | 2,330,636
| 16 per cent | £167,623
|
| Match 5 | 55,492 | 10 per cent
| £1,961 |
| Match 4 | 1,033 | 22 per cent
| £70 |
| Match 3 | 57 | Guaranteed £10
| £10 |
*Saturday draw since launch.
3.7 The chances of a rollover (no player matching the
six numbers needed for the jackpot prize) are around 7 per cent
for the Saturday draw and 36 per cent for the Wednesday draw.
This results in around 12 rollovers a year.
3.8 In addition to the naturally occurring rollovers,
the operator plans to run about four superdraws at key times in
the year to maintain interest in the game. A jackpot level is
pre-determined (eg £20 million) and is supported by advertising.
3.9 Some notable highlights to date are as follows:
(a) highest jackpot win on a single ticket is £22.6
million (10 June 1995);
(b) largest number of winners of the jackpot is 133 (14
January 1995);
(c) highest draw sales is £127.8 million, due to
first double rollover (6 January 1996).
Thunderball
3.10 Tickets are £1 for each line (set of six numbers)
for each draw:
(a) Game is drawn only on a Saturday.
(b) Players choose five numbers from 34 and then one number
from 14 or use the "Lucky Dip" option.
(c) Overall odds of winning are one in 18.2.
(d) The overall prize payout is expected to be around
54.11 per cent but is not a certain figure as prize amounts are
fixed.
(e) Prize amounts are fixed (rather than parimutuel):
| Match | Odds (1 in)
| Fixed Prizes |
| Match 5 + Thunderball | 3,895,584
| £250,000 |
| Match 5 | 299,660.3 | £5,000
|
| Match 4 + Thunderball | 26,866.1
| £250 |
| Match 4 | 2,066.6 | £100
|
| Match 3 + Thunderball | 959.5
| £20 |
| Match 3 | 73.4 | £10
|
| Match 2 + Thunderball | 106.6
| £10 |
| Match 1 + Thunderball | 32.8
| £5 |
Big Draw (New Year)
3.11 Tickets are £5 each and comprise two games:
(a) For Game 1 players choose six years from last 100
years.
(b) For Game 2 players are randomly allocated (by the
computer) with one year from past 1,000 years and one year from
the next 1,000 years.
(c) The overall prize payout is 57 per cent of total ticket
sales.
(d) Fixed prizes are as follows:
| Game | Match |
Odds (1 in) | Fixed Prizes
|
| Game 1 | Match 5 | 12,547,920
| £10,000,000 |
| Match 4 + Bonus | 2,536,282
| £100,000 |
| Match 4 | 54,544
| £2,000 |
| Match 3 + Bonus | 27,272
| £1,500 |
| Match 3 | 890
| £150 |
| Match 2 + Bonus | 890
| £100 |
| Match 2 | 40
| £40 |
| Game 2 | Match 2 | 1,000,000
| £1,000,000 |
(e) The game ran for the first time last year and created
18 millionaires from Game 2.
Instants Tickets
3.12 The normal ticket price is £1, with some tickets
at £2:
(a) games featured on tickets range from one to four;
(b) standard prize payout is at 58 per cent of ticket
sales;
(c) since launch we have licensed 10 "ratchet games",
which have higher payouts at around 65 per cent payout. These
have the objective of encouraging new players into the market
with noticeably higher number of prizes, and motivating existing
players;
(d) top prize ranges from £1,000 to £100,000—dependent
upon the game appeal;
(e) the lowest prize tier is £1;
(f) the structure of the game portfolio to date has been
to continuously offer a "base game" (non-themed, simple
match three play style, same fundamental design with minor colour
changes and same prize structure) together with a range of individual
games. Base game sales currently represent some 15 per cent of
total sales;
(g) all prizes to date have been cash (rather than merchandise—eg
cars, holidays);
(h) the number of prize amounts usually varies from six
to nine tiers, sometimes with different ways of winning the same
cash amount (dependent upon the game play style);
(i) the most popular play style used to date has been
to match three cash symbols to win that amount. Other play mechanics
include "beat the score", "match the number",
"numbers in a row" (eg three 7s), "find lucky numbers/symbols".
3.13 The aim is to have a range of top prize amounts,
number of tiers within a game, game mechanics, themes and graphic
appeal in the game portfolio at any one time in order to provide
variety of appeal, with some 10 games available at any one time.
3.14 The overall strategy behind the distribution of
prizes is to balance the availability of top prizes, mid-tier
prizes of around £10 to £25 that winners talk about
("chatter"), and smaller wins of £1 to £5
("churn").
4. THE ROLE
OF THE
NATIONAL LOTTERY
COMMISSION
Background to the National Lottery
4.1 The Government set up the Lottery in 1993, and appointed
a regulator to select and then oversee the performance of the
operator. The Secretary of State for Culture, Media and Sport
is responsible for setting the policy framework for the Lottery
generally. This includes determining the role of the regulator.
The Regulator of the Lottery
4.2 The Director General of the National Lottery and
his office, OFLOT, was set up in 1993 under the National Lottery
etc Act 1993 (the "Act"). He selected Camelot Group
plc as the operator of the Lottery from eight bids. Following
the National Lottery Act 1998, from April 1999 OFLOT was replaced
by the National Lottery Commission. This was to ensure there is
less risk, actual or perceived, of conflict of interests and that
a wider range of knowledge, experience and expertise could be
brought to bear on lottery regulation.
The Commissioners
4.3 The Commissioners hold part-time appointments for
up to five years. The Commissioners choose their own Chairman,
who may hold office for at most 12 months and may not hold office
again for at least as long. The Commissioners are responsible
for appointing a full-time Chief Executive.
Independence of the Commission
4.4 The Secretary of State has powers under the Act to
direct the Commission in the exercise of its functions and select
the Commissioners (Annex C[2]).
We are otherwise independent.
Duties of the Commission
4.5 Our statutory duties are to:
(a) ensure the Lottery is run and promoted with all due
propriety;
(b) protect the interests of participants, and, subject
to these; and
(c) maximise the returns available for the Good Causes.
Duty 1: Ensuring Propriety
4.6 We check that parties involved with the Lottery are
fit and proper persons, have rules to protect prizes to players
and procedures to secure draw integrity. We have a division devoted
to checking that Camelot complies with licence conditions. Compliance
activity includes check visits to Camelot's and retailers' premises,
as well as attending draws.
Duty 2: Consumer Protection
4.7 The three priorities for consumer protection are:
(a) to ensure all players are treated fairly;
(b) to ensure as far as possible that playing remains
fun and does not become excessive; and
(c) to ensure under-age participation is minimised.
4.8 There are a variety of ways in which the Commission
addresses these priorities:
(a) ensuring information is readily available;
(b) ensuring that winners' anonymity is protected;
(c) handling complaints against the operator that it has
not itself resolved to a player's satisfaction; and
(d) ensuring adequate controls against excessive play
and under-age play (below 16 years).
Duty 3: Maximising funds for the Good Causes
4.9 This is taken into account when selecting the licensee
to operate the Lottery, and in considering game licences and ancillary
activities. Through the licence and checking compliance we ensure
that lottery funds for good causes go to the distribution fund
at the right time, in the right amounts, and attract interest
in appropriate circumstances.
Functions of the Commission
4.10 The Commission has the following functions:
(a) Selecting the operator: to issue a licence
to authorise a body corporate to run the National Lottery (under
Section 5 of the Act). Only one such licence may be issued at
any one time;
(b) Licensing games: to issue licences to authorise
a body corporate to promote lotteries as part of the National
Lottery (under Section 6 of the Act). Each game that forms part
of the National Lottery is subject to such a licence; and
(c) Enforcement: to ensure that the provisions
of the licences that it grants are complied with. The Commission
has a range of remedies available to it, which include publicity
recording licence breaches, powers to fine, powers to seek enforcement
in the high court, and, in extreme cases, licence revocation.
Status and accountability of the Commission
4.11 The Commission is a non-departmental public body.
The accounting officer is the Chief Executive.
4.12 The Commission is accountable to Parliament through
publication of its annual report, and the Secretary of State is
responsible for appointing the Commissioners. The DCMS sometimes
asks the Commission to provide written answers to Parliamentary
Questions.
4.13 The Commission may be called before Parliamentary
Select Committees (in particular the Select Committee for Culture,
Media and Sport, and the Committee of Public Accounts).
4.14 The Commission holds an annual open meeting allowing
the public to question us about our work, and publishes a range
of information about its work and policies, including on its website
at www.natlotcomm.gov.uk.
Appealing against the Commission
4.15 Judicial review can be sought to challenge the way
the Commission exercises its powers. There are rights of appeal
against fines and the revocation of a licence. The Commission
is required to give written reasons to those directly affected
by its decisions in the exercise of its functions.
The Commission's Funding
4.16 The Commission is funded by vote by Parliament.
Its net expenditure is recovered from the National Lottery Distribution
Fund and licence fees.
Distributing Funds to Good Causes
4.17 Lottery funds are released by the Lottery operator
directly to the Secretary of State for Culture, Media and Sport
who in turn releases it to grant giving bodies. The money then
goes to a range of good causes. The grant giving bodies are separate
from the regulator. The Commission does not make grants.
Other Gambling in the UK
4.18 The Home Office has responsibility for other forms
of gambling in the UK. The regulator for other UK lotteries, for
which the law is different, is the Gaming Board for Great Britain.
The Westminster Parliament has sole legislative responsibility
for the National Lottery.
More Information
4.19 The Commission has published a range of material
explaining its role and activities. The key documents included
with this submission are:
— National Lottery Commission Annual Report 1999-2000
(Annex D[3]).
— Information Notes 1 to 7 (Annex E*).
— Vetting Briefing Note (Annex F*).
5. THE ENFORCEMENT
OF THE
AGE LIMIT
FOR PURCHASE
OF LOTTERY
TICKETS
Regulatory Framework
5.1 It is illegal to sell Lottery tickets to anyone aged under
16. The rationale for this is that young people are less likely
to be able to control their gambling, and are therefore more susceptible
to excessive and problem play.
5.2 From the outset of the Lottery, arrangements were
made to ensure there were adequate safeguards to prevent under-age
play, for example:
(a) all game designs have to be approved by the Commission—games
likely to encourage under-age play are not licensed;
(b) unattended vending machines are outlawed;
(c) the operator must comply with an advertising code,
which contains some 16 rules especially on under-age play. For
example, no advertising should be likely to appeal primarily to
under-16s; and
(d) it was agreed with Camelot that any retailer prosecuted
for an under-age sale would have their terminals removed.
Monitoring and the 1998 Report
5.3 OFLOT monitored under-age sales from the outset of
the Lottery—and the Commission continues to do so. During
1997-98, a report commissioned by OFLOT found that some 7 per
cent of the young people sampled had been illegally sold a National
Lottery ticket in the week preceding the survey. This figure did
not indicate any improvement from earlier surveys.
The Call for Action and Project 16
5.4 In response to the regulator's consequent call for
action, the operator introduced a range of training, education
and other initiatives under the "Project 16" banner.
Particularly welcome was the introduction of a test purchasing
initiative in April 1999—Operation Child—set up to
cover some 5,000 retailers each year, which tests how well retailers
are performing when confronted by a young person wanting to buy
a Lottery ticket. This reflected the emphasis placed originally
by OFLOT and now on the Commission on the need to establish effective
detection and deterrence arrangements. It is widely recognised
by trading standards that test purchases—and the threat
of test purchases—leading to possible prosecution, has a
significant deterrent effect. Unfortunately, local authorities
do not generally see Lottery test purchases as high a priority
as, for example, tobacco test purchases. Further, some local authorities
and courts are resistant in principle to conducting test purchases—they
raise issues of entrapment.
5.5 The emphasis in Operation Child is on retailer training
and education. But it has a hard edge too—with a "three
strikes and out" policy. This means that the retailer's Lottery
terminal is withdrawn after the third occurrence. We recognise
the difficulties retailers may have in judging age and confronting
apparent under 16s, but Camelot's retailer panel has itself come
to accept the scheme is appropriate and fair. The growth in recent
months of effective proof-of-age card schemes—such as Validate
and Citizen Card—has helped, though such cards remain far
from universal.
5.6 It should be noted that Operation Child is not able
to use under-16s to conduct such test purchases, as this would
be illegal. Instead, the operator uses carefully selected young-looking
16 year olds. Thus, in selling to an Operation Child test purchaser,
the retailer is not committing an offence, but is demonstrating
that the safeguards that should be in place to prevent under-age
sales may not be working. This is why a "three strikes"
policy is currently considered appropriate, compared to the "one
strike" policy implicit in the law against under-age sales.
5.7 In short, Operation Child, has, for the first time,
provided a programme with wide national coverage to detect and
deter those retailers who fail to safeguard against under-age
sales. The programme complements the Trading Standards operations,
whose coverage is, as noted above, patchy.
The 2000 Report
5.8 In February of this year, however, we published the
results of a survey undertaken in 1999 to monitor sales to under-16s.
It was disappointing to discover that the proportion of illegal
under-age sales was similar to the 7 per cent recorded in the
1997 survey. Operation Child was, however, a relatively new initiative
at the time the survey fieldwork took place, and the survey therefore
may not have provided a true reflection of the operation's effectiveness.
Indeed, more up-to-date management information emerging from the
operation at the time of the report suggested that the operation
was now beginning to bite, with a significantly lower proportion
of retailers selling to test purchasers.
5.9 In recognition of this, the Commission called for
Camelot to review with independent experts Project 16 to ensure
the range of initiatives was as effective as possible, but did
not seek a strengthening of the sanctions policy underpinning
Operation Child.
Future Action
5.10 We continue to monitor independently the progress
of Project 16 and, should our current study (which we hope to
publish by the end of the year) indicate that the operator's initiatives
are failing to reduce sales to under-16s, then there is scope
for us to call for tougher action. For example, tougher sanctions
for retailers who fail Operation Child test purchases.
Further Information
5.11 Included with this submission are copies of the
Commission's two most recent publications on this topic:
— Under 16s and the National Lottery (February 2000)
(Annex G[4]);
— News Release 03/2000, which accompanied publication
of the above report (Annex H*).
6. THE PROMOTION
AND PUBLIC
IMAGE OF
THE LOTTERY
6.1 It may be helpful to draw a distinction between:
(a) the image of the National Lottery "brand",
symbolised by the crossed fingers logo, and represented by the
portfolio of games on offer—which is within the remit of
the operator to position and manage and the NLC to regulate; and
(b) the wider image of the National Lottery which is influenced
by the activities of various components comprising the Lottery
in the public's mind—including the operator, the operator's
shareholders, key suppliers to the operator, bidders for the operator
licence, distribution bodies, beneficiaries, DCMS, the National
Lottery Commission, Lottery retailers and winners, lobby groups,
gaming competition, etc—and affected by quantity and quality
of media exposure.
6.2 This submission explains the former of these only,
given that the latter is not within the direct remit of the Commission.
Promotion
6.3 The promotion of the National Lottery by the operator
is undertaken principally through the following channels:
(a) advertising—TV, press, posters and radio;
(b) public relations—press releases and dialogue
with the media;
(c) the BBC draw show—featuring the draw itself,
information on beneficiaries and entertainment; and
(d) the National Lottery web-site.
6.4 Advertising by the operator is regulated through
the Advertising Code of Practice. Compliance with the code is
a part of the operator's licence agreement which is monitored
by the Commission. Advertising content includes the launch of
new games, existing games, information on winners (numbers and
individuals who agree to publicity) and information on beneficiaries
(with the agreement of the relevant bodies). Care is taken to
ensure that the audience for these television shows does not include
young people who are under 16 years old.
6.5 The aim is to encourage participation in all games,
but without encouraging excessive or under-age play.
Public Image
6.6 The objective, from the launch of the National Lottery
in 1994, was to position it as a "harmless flutter"—a
means of having fun and at the same time raising money for the
designated Good Causes. The expectation was that a large majority
of the adult population would spend a small sum of money weekly.
In a gaming market context it was positioned at the "soft"
end of the spectrum, with betting and casinos as the "hard"
end.
6.7 This aim has materialised, and six years after launch
some 60 per cent of the adult population still regularly spend
around £2 a week. The NLC commissions its own market research
to monitor expenditure levels with a view to ensure that games
do not give rise to excessive play.
6.8 Another strand of the image is that of integrity
and transparency. This applies particularly to the determination
of winning numbers, which is affected for the online games through
the live drawings on a Saturday and Wednesday nights on BBC television.
6.9 An important area to the image of the Lottery is
ensuring that illegal sales to under 16s do not take place. The
operator has agreed an Advertising Code of Practice with the Commission
which provides clear guidelines to prevent advertising (either
in content or placement) from appealing to children. Also, the
Commission has ensured that the operator has taken a firm line
with retailers who have been found to be selling tickets to children,
with penalties including the ultimate loss of terminals.
6.10 A further fundamental requirement is for the Lottery
to be seen as generating winners (especially jackpot winners).
Every opportunity is taken by the operator, when winners agree
to publicity, to celebrate their success in the national and local
media in a seemly manner, and with safeguards to preserve the
dignity of winners.
November 2000
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