3 Regulation of the National Lottery
34. Camelot was optimistic about the merger,
seeing it as opportunity to discuss with the Gambling Commission
a regime that allowed it as the Lottery operator more autonomy,
with fewer operational issues being referred to the Commission
for approval. It believed that this type of regulation would be
more consistent with the approach to regulation adopted by many
other regulators, including the current Gambling Commission. Camelot
saw the challenge for the merged body as being to meld and dovetail
these two approaches into something that met the statutory obligations
and which would be consistent and transparent.[44]
35. The National Lottery Commission is an atypical
regulator in that it is solely responsible for the National Lottery
which is a monopoly, run by a private sector operator for a relatively
long tenure. Anne Wright CBE, Chair of the National Lottery Commission,
described the position as follows:
Whatever the debates might have been at the time,
it has proved of great value to have a single, independent, strong
and effective regulator of the Lottery. It is now a mature institution
with a mature operator, and it makes sense to be able to reap
the benefits of having a merged body, provided that the risks
can be met.[45]
A comparison of the Gambling Commission with the
National Lottery Commission makes the latter seem a relatively
costly system of regulation. The Gambling Commission has about
200 staff, an annual budget of £13 million, and licenses
about 4,000 gambling operators. The National Lottery Commission,
on the other hand, has 15 per cent of the Gambling Commission's
budget, 20 staff, but supervises only one operator. However, Jonathan
Stephens, Permanent Secretary at the DCMS, put the National Lottery
Commission's role in context:
"... it is there to secure and protect £1.9
billion of income for good causes, which is a form of public money.
It is generated by creating a legal monopoly, which undoubtedly
does require regulation. I was just doing the sums in my head
... I have worked it out as one-tenth of 1% of the income of good
causes. I think it is a fundamentally different role from the
one that the Gambling Commission has been applying to a very competitive
market, where its role is primarily about probity and protection,
whereas with the granting of a legal monopoly, it is also important
that there is a regulator who is ensuring that Camelot is working
hard to generate proper and maximum returns. [46]
36. We accept that regulation of the
National Lottery is different from the regulation that applies
to the competitive gambling industry given the client-management
role and monitoring of the operator that needs to take place to
ensure it is staying within the terms of its licence. We also
see the National Lottery as a national institution that must be
protected. However, we still find it extraordinary that the National
Lottery Commission has required so many staff and such a large
budget to oversee a single company. Given that the underlying
rationale for this merger is about efficiency, effectiveness and
economy, we believe that the regulatory mechanism should be adjusted
to give Camelot more licence to act. The Commission should define
the parameters in which it might do so. This approach would now
seem appropriate and likely to be more cost efficient. We also
expect that the new merged Commission will be considerably less
costly and more efficient than either of its predecessors.
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