APPENDIX 14
Supplementary memorandum submitted by Camelot Group plc
BACKGROUND
In the 1999 Home Office Gambling Prevalence Study 1.2 per cent of the population were identified as problem gamblers. Of this percentage 0.8 per cent were directly attributed to The National Lottery. More recent research through GAMCARE, has shown that of 40,000 attempted calls to their helpline only 0.5 per cent related specifically to The National Lottery. Camelot observes the situation through a monthly breakdown of figures provided by GamCare, so that any potential increase can be carefully monitored.
Over the last three years Camelot has invested—£1.7 million in developing and implementing prevention strategies. In 2001 the total amount spent on these strategies was £526,983.
1. Please could you provide in detail a breakdown of:
(a) The amount of money spent by Camelot last year on research into problem gambling
Camelot has outlined the amount spent on problem gambling in each of its published Social Reports. The figure for last year covers research and the creation of the "Game Design Protocol", a research tool designed to specifically measure the potential risk of proposed National Lottery games on vulnerable groups—(ie the under 16's, low income players and people with gambling problems). The total cost of research for the period for the 1 January 2001 to the March 2002 is £69,125.
(b) The amount of money donated last year by Camelot to GamCare and Gordon House
The donation directly to GamCare for the same period is £50,000 and to Gordon House £3,884. We have made similar levels of donation in each of the last four consecutive years. However, this is only one aspect of support. There has been additional funding for specialised partnership projects. For example, we have funded the production of an education pack for youth leaders to use in their work entitled "A Certain Bet". In addition in 2001 we created and ran in partnership with GamCare, the Parental Awareness Campaign with a current expenditure of £95,587 to address parent education on problem gambling amongst young people across all the sections of the gambling industry. This as with other initiatives was developed with full consultation to stakeholders such as the parent support NGOs and had the support of the NLC. Our relationship with GamCare is based upon active engagement in developing our policy approach to prevention and in sharing best practice.
(c) The amount of money (if any) given last year by Camelot to the Industry Trust
There has been no direct financial donation to the Trust. However, Camelot has given support in kind, through being directly involved in helping to set up the Gambling Industry Trust. Camelot has also supported the trust in setting up its research board.
(d) Please could you provide details of where the money for these donations and research came from?
The funding for research comes from Camelot's operating costs of The National Lottery. Individual donations would directly come form pre-tax profits. The current split of the Lottery pound can simply be illustrated as approximately 28 per cent to the Good Causes, 12 per cent Lottery Duty, 50 per cent prizes, 5 per cent retailer commission, 5 per cent operating costs. These figures are based on Camelot's sales projections in the bid for the second licence period.
(e) How much you are obliged to spend on research or donate, under Camelot's licence agreement to run the National Lottery, and how much is voluntary?
There is no licence obligation for research or donations. However, through regulation there are directions for "Operation Child"—a programme specifically introduced to combat underage sales, through the use of test purchasing. The amount spent on Operation Child for the period from the 1 January 2001 to March 2002 is £211,781.00. The commitment to Operation Child has now increased from 5,000 visits each year to retailer visits to 10,000 visits per year, thereby increasing the financial commitment to the project. The programme started in the first licence as a voluntary activity undertaken by Camelot and became a licence condition in the second licence period.
(f) Please could you provide forecasts of how much will be spent on (a), (b) and (c) next year?
We expect to maintain the whole range of our commitment under the two prevention strategies (Prevention of excessive play and prevention of underage play). This will include ongoing financial support for GamCare. We have no regular commitment to Gordon House as the National Lottery is not the cause of the problems of the existing client group that they are supporting. However, we do make occasional donations upon request. The research programme will not have a separate budgeted figure as the Game Design Protocol, the key research tool, will be fully integrated in to the business activities. We will report on the total level of our spend at the end of the year as part of measuring our social impact through our social report. We do this using the London Benchmarking Group model.
(g) Please could you provide details of how much Camelot spent on research into the effect on the National Lottery of the Budd proposals and the Government proposals for deregulation, and where the funding for this research came from?
As detailed research had not been undertaken by the Budd Review team, who had been charged with considering the potential impact on the National Lottery, in the interests of the National Lottery, Camelot commissioned reports from PriceWaterhouseCoopers and The Henley Centre and the University of Salford. The cost for the research was approximately £357,257. This research clearly is not connected to spend associated with prevention or treatment strategies and is not counted within the £526,983 invested in 2001-02.
2. You have stated that Camelot wishes to give priority to the funding of research into the prevention of problem gambling, rather than the treatment of problem gambling. The Chairman of the Industry Trust has given evidence that the Trust will fund research into the prevention of problem gambling, has Camelot considered making a contribution to this portion of the Trust?
Research is only one facet of Camelot's approach to the prevention of problem play. Camelot has developed two comprehensive strategies for prevention: prevention of excessive play and prevention of underage play. Copies of these policies are attached. Camelot's commitment is both to research and to the implementation of prevention strategies. Full activities include: research; education and awareness raising; promoting responsible play of The National Lottery; training retailers; operation to prevent under 16's playing the National Lottery; wide-scale consultation of stakeholders in best practice in prevention and the implementation of the strategies. The majority of the budget therefore is spent through operational initiatives to prevent problem play. Camelot's priority is to implement these strategies which are specific to the National Lottery. We believe it would be inappropriate to either develop the strategies or attempt to implement them through the programme of the Trust.
The proposals in a "Safe Bet for Success" would indicate that the Gambling Industry will be desegmented and therefore The National Lottery will remain segmented and distinct. This has considerable implications for the scale of the creation and prevention of problem gambling. We expect that the growth in the number of problem gamblers will rise as a result of the desegmentation and therefore has no bearing on the National Lottery. However, we are more than willing to share the development of best practice with the Trust.
3. Would you change your view about joining the Trust if pressed by the Secretary of State or the National Lottery Commission?
Camelot is committed to developing the Lottery and its regulation in partnership with the Secretary of State and the NLC. Clearly if the current segmented position of the National Lottery were to change we would re-consider the nature of the relationship with the Trust.
4. Does Camelot consider that a statutory levy to support prevention treatment and research into problem gambling would be more effective and equitable across the industry than voluntary contributions to the Trust?
In the past we have expressed a view that if a levy was introduced, that this should be proportionate to the risks that each sector holds for vulnerable people.
5. You mentioned decreases in sales of National Lottery tickets in other jurisdictions. It would be very useful if you could provide the Committee with the figures and sales patterns of foreign lotteries.
The table below summarises the recent performance of Lotto in major lottery markets.
|
Lottery |
Period |
Lotto Sales % Decline |
|
UK |
FY98 to FY01 |
-13
|
|
New York |
FY98 to FY01 |
- 36
|
|
Texas |
FY98 to FY01 |
- 9
|
|
Sweden |
CY98 to CY01 |
-16
|
|
British Columbia |
FY98 to FY01 |
- 13
|
|
France |
CY98 to CY01 |
- 15
|
|
Italy |
CY98 to CY01 |
15 |
Source: La Fleur's 2002 World Lottery Almanac and World Lottery Association Sales Statistics. (That European data—excluding Camelot—is for Calendar years whilst North American data is for Fiscal years).
International Comparisons show that Lotto sales worldwide decreased by 6.11 per cent, Lotto sales in Europe decreased by 10.44 per cent.
US (EXCLUDES MULTI-STATE GAMES)
Nineteen out of 23 US lotteries have experienced Lotto sales declines over the five-year period FY97 to FY01.
The New York Lottery (the largest US lottery and fifth largest lottery in the world) experienced a 36 per cent decline in Lotto sales over the period FY97 to FY01.
The Texas Lottery (fourth largest US Lottery and ninth largest lottery in the world) experienced a 20 per cent decline in Lotto sales over the same period. However, Texas changed the matrix in FY01 and sales have started to recover.
The California Lottery (eighth largest lottery in the world and one of the four lotteries to post an increase in Lotto.
The majority of Lotto games in Canada are multi-province and therefore are not representative.
The only Canadian lottery that had a provincial Lotto game in FY97 was British Columbia. Over the period FY97 to FY01 sales have declined by 19 per cent.
Since FY97 Quebec and Ontario have launched provincial Lotto games. In Quebec sales have increased year on year since launch (FY99 +81 per cent, FY00 +6 per cent, FY01 +5 per cent). However, in Ontario sales have decreased over the last two years (FY00 -4 per cent, FY01 -15 per cent).
AUSTRALIA
In Australia (as with Canada) the majority of games are multi-state and as such are not representative.
EUROPE
Five out of 14 European Lotteries have experienced declining Lotto sales over the last five years.
The largest decreases over the five-year period were experienced by Sweden and France, -20 per cent and -18 per cent respectively.
Lottomatica (Italy), although recording a net increase in Lotto sales over the period CY97 to CY01 (+62 per cent), actually experienced dramatic declines over the more recent period of FY99 to FY01 (-27 per cent).
"NEW" REVENUE GENERATORS
To counter the decline or stagnation in Lotto and more traditional lottery games, a number of lotteries have already introduced products that appear to offer significant sales potential. However, with the possible exception of a multi-state game these opportunities are beyond the scope of UK lottery regulation (or NLC approval). Furthermore Camelot recognises the duty to raise funds for the Good Causes with social responsibility. The areas of growth appear to be in the following products such as Video Lottery Terminals, Keno and Sports Betting.
A number of examples of how lotteries have or hope to increase their sales using these product areas.
SWEDEN—VLTS, KENO & SPORTS BETTING DRIVE GROWTH
The bottom data line on the graph highlights sales for "traditional" lottery products. Svenska Spel also operate casinos and greyhound racing in Sweden.
|
Game |
CY97 |
CY98 |
CY99 |
CY00 |
CY01 |
Diff. CY01-
CY97
|
|
Sports Betting |
3,237,149,043 |
3,233,352,592 |
3,171,954,965 |
3,467,249,942 |
3,610,037,000 |
372,887,957 |
|
% change |
|
0 |
- 2
|
9 |
4 |
12 |
|
Keno |
487,405,105 |
733,088,585 |
735,391,470 |
778,947,860 |
877,290,000 |
389,884,895 |
|
% change |
|
50 |
0 |
6 |
13 |
80 |
|
VLT |
340,253,393 |
1,222,524,068 |
2,002,331,355 |
2,759,299,091 |
4,171,323,000 |
3,831,069,607 |
|
% change |
|
259 |
64 |
38 |
51 |
1,126 |
LOTO QUEBEC
70 per cent of Loto Quebec's sales growth over the last five years is directly attributable to Video Lottery Terminals.
FRANCE
Rapido, a quick draw game played every five minutes in bars or cafes, represents 84 per cent of sales growth over the period CY98 to CY01
DENMARK
Over the period CY00 to CY01, VLTs were the prime reason why Dansk Tips were able to increase total sales (+106 per cent of total sales growth).
NEW YORK
New York has significantly increased their total sales over the last few years predominantly due to the growth in Instants sales.
However, to continue this growth the New York Lottery is pushing forward on two new non-instants initiatives. Firstly, as Lotto sales have declined consistently over the past few years, the Lottery have joined and launched the new multi-state game Mega Millions (May 2002).
The State Legislature has approved the introduction of Video Lottery Terminals and the lottery aim to have these operational by the first quarter of 2003. An increasing number of jurisdictions in North America and Europe are introducing Video Lottery Terminals to stimulate sales growth.
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