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Thursday, 24 May, 2001, 15:28 GMT 16:28 UK
Camelot hit by big fall in sales
Lottery ticket
Ticket sales have fallen during the last six months
Sales from the UK National Lottery have fallen below 5bn for the first time in four years, according to operator Camelot.

We are committed to that target (15bn) but we don't operate in a vacuum. We need the co-operation of the government and our regulator

Camelot spokesman
Returns of 4.98bn in the year to 31 March were down 2.1% on the previous year.

But Camelot insisted that the rate of decline has now "stabilised".

It added that there were plans for a "large investment" to trigger future sales growth. The company also hopes to embark on an aggressive marketing campaign.

The lottery operator also claimed that the much-publicised delay in being awarded the next licence - after a lengthy battle with Sir Richard Branson's People's Lottery - had taken its toll.

Good causes

Camelot said it was on course to beat its original pledge to raise 9bn for good causes, made when the lottery was launched in 1994.

There is a finite life-cycle to these games. People eventually get tired of them

Prof Ian Walker
Warwick University
However, it said its ability to meet the 15bn for good causes it has promised for its next licence period, which starts in 2002, would depend on other factors.

A Camelot spokesman said in a statement: "We believe we can reach our target of 15bn if our business plans are implemented as set out in our bid for the second licence.

"...Its attainment is not only dependent on Camelot's performance but also on a number of other factors eg competition in the market place, our regulator the National Lottery Commission, government and changes to broadcast regulations.

"We have delivered - in fact exceeded - on our promises in the first licence and believe we can deliver on our promises for the second."

Camelot told BBC News Online it is in ongoing talks with regulator Offlot over the introduction of bigger prize money and more aggressively marketed games.

A Camelot spokesman said: "We are committed to that target (15bn) but we don't operate in a vacuum. We need the co-operation of the government and our regulator."

The lottery operator was recently granted permission to launch the first 1m instant scratch card, which will be unveiled in June.

It has also pledged to increase the amount it spends on marketing, from 57m in 2000 to 62m this year.

A spokesman said it planned to spend an average of 75m a year on marketing over the course of the seven-year licence.

Reduced profits

Camelot's profit before tax was 49.1m in 2000-2001, compared with 56m in 1999-2000.

The lottery operator said the drop was largely as a result of the costs incurred in winning the bid for the next licence.

A Camelot spokeswoman acknowledged that the past few months have been "difficult" for the lottery operator.

The company said sales for the first half of last year were up 4%, before they fell during the last six months amid wrangling over the seven-year licence.

Sales of National Lottery Instants scratch cards have also fallen by 2.6% to 546m.

However, the rate of the decline was low compared with a 16% slump during the previous year.

Contributions to good causes were 1.39bn with a further 598m allocated to the UK government in tax.

Prize money during the last year totalled 2.47bn and retailer commission amounted to 253m.

'Managing decline'

Camelot said its drop in fortunes mirrored the experiences of longer-established games in other countries.

"International experience shows that sales do peak and then decline," said the spokeswoman.

"It is about managing that decline."

However, some lottery experts believe the structure of Camelot's contract with the government is to blame for falling sales.

New games

Professor Ian Walker, of Warwick University, told BBC Breakfast: "Originally they [Camelot] got quite a lot for every ticket sold.

"Now they get a relatively small amount, so they don't have a strong incentive to maintain sales."

He added: "There is a finite life-cycle to these games. People eventually get tired of them."

A Camelot spokesman said there were plans for new games, which will be announced after the next licence term begins in January 2002.

New ways to play, such as via the internet, will also be introduced.

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See also:

26 Jan 01 | Business
Camelot 'backtracks on good causes'
19 Dec 00 | Business
Camelot: Back from the brink
12 Nov 99 | UK
How to win the Lottery
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