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Tuesday, 19 December, 2000, 16:14 GMT
Camelot: Back from the brink
Sir George Russell
Chairman Sir George Russell admits Camelot is seen as greedy
Camelot, the company that runs the National Lottery, has long been one of the nation's favourite punchbags.

But its determined defence of its right to compete for the renewal of its National Lottery license has impressed many of its critics.

Camelot aggressively pursued the matter in the High Court, forcing the Lottery Commission to back down from its original exclusion and winning a second chance.

And it was also clever enough to distance itself from its technical supplier, GTech, after the company was caught in a lawsuit with rival Richard Branson.

It is a remarkable turnaround for a company that the subject of popular and political criticism for much of the time it first held the Lottery license.

Perception problem

Since winning the licence to run the lottery, popular perception has been that Camelot has sat back and watched the profits flow in at the expense of good causes.

Even Camelot's chairman Sir George Russell admits its public image leaves something to be desired.

"I don't think Camelot is seen as bad or evil, just greedy."

Rival Virgin says Camelot's profits have made people cynical about the lottery.

"Camelot is a monopoly backed by a government licence to print money. People have become cynical because they think they are buying tickets from an operator which is a money-making machine," a spokesman for Virgin said.

Troubled profits

The Conservative government awarded the licence for a profit-making lottery to the Camelot consortium, made up of Cadbury Schweppes, banknote printers De La Rue, computer company ICL and Racal.

lottery ticket
Camelot says it runs the lottery on a 1% margin
From the start, part of Camelot's problem has been the nature of the job it has to do.

Many people believe lotteries should be run for love not money, so even though Camelot was playing by the rules of its licence, it still came under fire.

In 1997, chief executive Tim Holley, chairman George Russell and head of corporate affairs David Rigg picked up six-figure bonuses.

The new Secretary of State for Culture, Media and Sport, Chris Smith, criticised Camelot for profiteering at the expense of good causes. This prompted the operator to increase its good causes target.

By September 2001, the company will have raised 10bn, 1bn more for good causes than they had originally forecast.


Camelot does have its admirers. They say the national lottery is a smoothly-run operation. To back this up, surveys have found that Camelot is one of the world's best run lotteries.

It returns more as a percentage of sales to the Treasury and good causes than any other of the 34 national lotteries monitored in a 1998 survey.

Last year, Camelot announced a drop in profits to 70m, down from 86.5m in the previous year.

While the cash it gave to good causes dipped to 1.49bn from 1.57bn, the proportion of sales that went to good causes was at its highest level ever, 28.6%.

Boardroom pay was trimmed, the total pay for the board was 1.52m, compared with 2.08m the previous year.

And in February the company pledged to cut boardroom bonuses by a further 25%.

But still the fat cat slur is one which is unlikely to disappear.

Next generation licence

The current licence will expire in 2001, with the new license set to run until 2008.

Camelot's only rival was the consortium led by the flamboyant Richard Branson of Virgin, which wants to run a non-profit lottery.

Camelot pledged to improve its delivery, with lottery players being able to use the internet, mobile phones and interactive television, and invest 1bn in new systems.

It has teamed up with the Post Office - the biggest retailer for the lottery - and internet service provider Freeserve in its new bid.

"Our approach is based on continuation and innovation to deliver the best deal for the good causes and the best opportunities and most fun for players," Camelot said in submitting its bid.

And it says in the next lottery period it will provide more than 15bn for the good causes.

Labour's manifesto said it preferred a non-profit making group to take over.

And culture secretary Chris Smith said that levels of remuneration would be a factor in determining who runs the lottery.

But Camelot has a huge technical advantage.

It owns the equipment and is not obliged to co-operate in handing it over to a new supplier.

Indeed, it could have launched its own rival lottery.

In the end, the fact that it was a profit-making body may have proved an advantage.

As Camelot chairman George Russell pointed out: "We operate on a 1% margin. It is not difficult to lose a 1% margin. If it is a not-for-profit lottery, who pays for losses when they occur?" he said.





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