Good causes distributors 'cautious' after National Lottery income drop

A drop in National Lottery income for good causes has left distributors "very cautious" about ensuring they can meet commitments for future spending, a committee of MPs has heard.

Those responsible for distributing the funds to good causes are monitoring the situation "like a hawk" after the overall amount fell by 15% over the year to April as players turned away from draw-based games to scratchcards, the Public Accounts Committee heard.

Department for Digital, Culture, Media and Sport (DCMS) permanent secretary Sue Owen said: "Everybody is now being very cautious looking forward."

She said: "If some of the products that have begun can't be finished that is really quite serious. We all have to pay a lot of attention to this and it's definitely high up on my department's risk register."

But she added: "We have very good people on the boards of distributors who are watching this like a hawk."

A National Audit Office (NAO) report in December showed income fell to £1.63 billion at the same time as three of the six largest Lottery distributors increased their grant commitments by a total of £88 million.

The drop came as Lottery sales fell by 9% to £6.93 billion compared with the previous year.

Camelot has predicted a further fall in sales and income for good causes in 2017-18.

The NAO said distributors, which include UK Sport, Spirit of 2012, Heritage Lottery Fund and the Big Lottery Fund, often had commitments spanning many years, "so it is likely that commitments will exceed their fund balance at a given date".

Nigel Railton, the chief executive of National Lottery operator Camelot, told the committee: "We are increasingly competing for the leisure industry pound in people's pockets.

"The market has evolved. The amount of marketing spending in the industry is enormous. We cannot compete with the structural benefits of some of our competitors.

"If we're investigating why contributions to good causes have declined, market forces is definitely a contributor."

The committee also quizzed Ms Owen over potential regulation to address concerns about the increasing take-up of scratchcard gambling.

She said: "It's definitely something we're looking at. I'm not going to say we're definitely going to do something about it but it's definitely something we're looking at."

Returns for good causes are higher from sales of draw-based Lottery games, which fell by 13% in the year to April, than for scratchcards and instant-win games, which fell by 2%, the NAO's report said.

Camelot has previously told the NAO that scratchcards and instant-win games returned less to good causes due to the need to offer a higher proportion of proceeds as prizes to encourage consumers to participate.

Late last year Camelot signalled changes to Lotto to give players "a better winning experience" as it announced a 3.2% drop in overall ticket sales on last year's first-half performance to £3.2 billion for the six months to September 23.

Changes to the Lotto draw in 2015 saw the number of balls increase from 49 to 59 and the chance of winning the jackpot decrease from one in 14 million to one in 45 million.

The cost of playing EuroMillions increased by 50p to £2.50 a line and players had to choose an extra number under changes introduced in September last year that decreased the odds of winning the jackpot but promised bigger prizes and double the number of UK millionaires.