Is National Lottery price rise a 'stealth tax'?


Lottery champagne

This year sees the first price increase for the National Lottery in its 20-year history - when the price rises from £1 to £2. A big chunk of the money will be ploughed into larger jackpots. However, a new report has revealed that George Osborne is set to make a small fortune from the changes too.

How will that work? And is it fair?

Price rise

The cost of playing the National Lottery is set to increase to £2 in September. It's a big jump - and constitutes a faster rise than inflation alone - which would increase the cost to £1.67.

Operator Camelot said the change was in response to customer research that showed people wanted more chances to win more money. As a result the prize for matching three numbers rise from £10 to £25. There will also be bigger jackpots – the average Saturday jackpot is expected to be to around £5 million and Wednesday's jackpot will be around £2.5 million. The company will also create a new Lotto raffle – at least 50 winners will scoop a guaranteed £20,000 in each Lotto draw.

However, the prize for matching five numbers will drop from £1,500 to £1,000 and the prize for matching five numbers plus the bonus ball will drop from £100,000 to £50,000.

There will be some winners and some losers from the change - and the amount paid out in winnings will remain at roughly 50% of the ticket price.


Osborne, however, is set to be the biggest winner. The report, from analysts GBGC claimed that the government will get a £1 billion slice from lottery ticket sales every year.

The money comes from Duty on National Lottery tickets - at 12%. The take has been rising since the onset of the financial crisis meant more people turned to the lottery. The government took £600 million in 2007 and £800 million last year. Global Betting and Gaming Consultants' Director Lorien Pilling commented: "Since 2007 the lottery duty the government has received has increased by 42% and the last few years have each seen record-breaking amounts of duty generated by the National Lottery's performance."

Doubling the price will not double the duty, because it will mean some people will stop playing (and perhaps turn to a cheaper alternative such as the Health Lottery). Meanwhile, others will reduce the number of lines they play or the frequency with which they gamble. Never-the-less the increased cost will bring the tax take to £1 billion a year within the next two years. Pilling says: "The forthcoming ticket and prize increases will spur further sales increases and, therefore, increase the amount the government receives in duty."

It's a tax rise, but is it a stealth tax? There will be those who argue that people will be spending more on tax without realising it, so it counts as a stealth tax. There will be others who argue that it's entirely voluntary, because no-one forces them to play.

But what do you think? Let us know in the comments.

10 consumer rights you should know

10 consumer rights you should know

More stories