Page last updated at 12:56 GMT, Wednesday, 27 July 2005 13:56 UK

The 1.5bn Olympic lottery puzzle

By Torin Douglas
BBC media correspondent

The lottery cash will help to built the caves complex
The Olympic fund-raising games will include a TV draw
The National Lottery may have seemed a relatively simple way of helping pay for the Olympics.

In fact, it won't be easy at all, even if the euphoria surrounding London's winning bid translates directly into ticket sales.

The Lottery must raise 1.5bn over the next seven years to pay its share of the public money going into the Olympics.

A further 650m will be raised from council tax in London and another 250m from the London Development Agency, while similar sums will be raised from ticket sales, marketing, sponsorship and the sale of television rights.

Half the Lottery's share - 750m - is due to be raised by special Olympic scratchcards and other games over the next seven years.

Gold scratchcard

As with other Lottery games, 28% of the ticket price will go to good causes, but in this case the Olympic fund will take all that money.

It's the first time the Lottery has been used to raise money for a specific purpose, and the first time players will know how their money is going to be spent.

The first Olympic game will be a Go for Gold scratchcard, costing 1 a ticket, with a top prize of 2012.

But there'll be many more games to come, including some on the internet and, in a few years' time, a TV draw, if regulators approve.

A new Lottery distributor is being set up to channel that money to the right projects and the chairman will be appointed in the next few weeks.

Camelot's chief executive Dianne Thompson believes the Olympics will boost total Lottery sales, and she has market research to support that view. It will certainly need to, if the target is to be reached.

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At present, the Lottery raises about 23m for good causes each week. The extra 750m for the Olympics works out at an extra 2m every week for the next seven years.

Camelot and the government accept that not all of this will be new money. Some will be transferred from other Lottery games - 'cannibalisation', as it's known.

That will reduce the amount being raised for the existing Lottery good causes - the arts, sport, heritage and The Big Lottery Fund, which pays for health, education, environment and charity projects.

And that's just the first 750m.

On top of that, the Lottery must find another 750m from the existing good causes.

Of that, 340m will come from the current sports distributors - UK Sport, Sport England, Sportscotland and so on - to pay for facilities such as Olympic swimming pools and other top-class facilities.

That may seem entirely appropriate, but without the Olympics that money might have been spent on local sports facilities around the UK.

Camelot confidence

A further 410m is due to come from other Lottery spending after the year 2009, when the current Lottery licence expires.

If necessary, the government will change the Lottery rules to cut the amount going to the existing good causes.

How confident are Camelot and the government that this 1.5bn will be raised? The answer is that no one can be certain because fund-raising of this type and scale has never been tried before.

But the regulator, the National Lottery Commission, has reviewed the business plan and said the proposals are achievable.

Will Lottery players decide to buy extra tickets because they want to help the Olympics effort? Will people who don't currently buy tickets be inspired to take part? And what impact will the 2008 Beijing Olympics have in helping build Lottery fervour and fever?

Those are the 1.5bn questions.

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