Competition heats up for UK National Lottery tender

UK National Lottery tender process
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With the September deadline to bid for the UK’s National Lottery licence now extended until February 2022, the incumbent, Camelot, produces a year of record sales and contributions to good causes that, it hopes, will trump its rivals. But is it too little too late?

 

It’s perhaps no coincidence that National Lottery operator, Camelot, has managed to raise the highest ever amount for good causes in 2020 – just as bidding commences for the next concession from 2024.

In declaring the record £1.89bn (£1.2bn of which has been earmarked for coronavirus relief schemes), Camelot said that despite the closure of retail shops in the beginning of the period, it achieved £8.3bn in sales through to March this year – the highest annual sum since it took over the license in 2021.

How did it wangle that?

The privately owned Canadian company said it began working with the National Lottery Distribution Fund when covid first struck, designed to boost awareness around the fact that lotto sales would directly contribute to schemes tackling the pandemic and so “boost” public awareness and interest in the game.

The £1.2bn diverted to covid-related schemes included suicide helplines and the funding of heritage sites that had been forced to close due to lockdowns.

The big dump of impressive figures could not be more timely for Camelot – which has been routinely faced criticism over the years for siphoning off too much profit from the monopoly (one of the most lucrative contracts a private company can be awarded from UKG) and not contributing enough to social causes – just as the incumbent finalises its bid for the 2024 renewal.

As the deadline approaches material bids are coming into focus; the tender itself shaping up to be one of the fiercely contested in the UK.

Czech lottery operator, Sazka, has long been in the running, although Richard Branson’s Virgin bid was withdrawn due to the disruption caused to his travel business – notably Virgin Atlantic airlines – in the wake of the pandemic. Also in play are the media mogul Richard Desmond with his firm, Northern & Shell, alongside an Indian gaming operator Sugal & Damani.

The latest and potentially most potent bid comes from a trio comprising the UK telecoms giant, BT, an Italian gaming group Sisal, and the children’s charity Barnardo’s.

The reasons for Sisal’s later announcement of intent, it said, was to give it more time to secure its partnership with Barnado’s. BT has since disclosed that Sisal had approached it for being its “preferred supplier” for communications technology and would play an advisory role in widening the appeal of the National Lottery – especially in terms of enhancing the “online experience.”

Sisal in turn, is owned by CVC Capital, a PE group which has been making shrewd investments in the gambling space for several years now. Sisal already runs lotteries in Italy, Turkey and Morocco.

Chief executive Francesco Durant revealed the bid had been in development for three years already, stating that digital development would be the “key growth driver” in its proposal – as well as upping the main lotto jackpot to attract more punters, bringing the draw back to national TV as it was up to 2016, and having BT help innovate in the retail sector.

“You have to be focused on a customer-centric approach to make sure the experience is outstanding no matter if they buy the ticket in a shop or online. The gap between that is getting thinner and thinner,” he said.

Camelot’s recent spike in sales suggests it is not prepared to hand the contract over that easily. The operator’s ticket sales fell 30 percent with the immediate impact of covid, but after investing heavily in more digital channels, changing tack in its approach to retailers and and increasing marketing spend for its covid relief scheme, Camelot lifted sales of its traditional draw-based games by 3.3 percent by the end of year, to £4.7bn – with sales overall up by 5.9 percent.

“The thing that was critical to our success last year was pulling together the Covid-19 fund,” said Nigel Railton, Camelot’s chief executive – although would not reveal any further details of his bid.

Camelot’s position as the incumbent has its advantages, according to David Zeffman, head of gambling and sport at law firm CMS: “You know what you’re getting and it’s tried and tested.”

However, there is a “corresponding minus:” “It is always them and that makes it easier for the competition to say you need some new ideas,” he added. “The criticism that I would have of them is that it is so land based and you would have thought that there is a much bigger online opportunity than they take advantage of.”

Around 70 percent of the UK’s adult population (37 million people) play the lottery at least one a year.


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