Sir Richard Branson Prepares Lottery Bid
Twenty years after his last attempt, Sir Richard Branson is preparing to bid again to become the operator of the National Lottery. If the rumors are true, this will mark Branson’s third attempt to take control of the UK’s lottery. Camelot has run the National Lottery ever since it was launched 25 years ago.
A Tough Race for Camelot
Camelot has been in charge of operating the National Lottery since it first began in 1994. It has also been owned by the Ontario Teachers’ Pension Plan since 2010. The operator has maintained its monopoly on the lottery for a long time, but this may be about to change. Camelot’s current lottery license period began in 2009 and is now coming up for renewal. Bidders are starting to register their interest and the chosen winner will take over in 2023. It is possible that Camelot could be granted another five-year extension on their license. However, it has become clear that Camelot will be facing some stiff competition.
It has been revealed that Sir Richard Branson is planning his bid to take over the National Lottery. He has tried and failed twice before, but it could be third time lucky for Branson. Camelot has recently faced accusations of inefficiency, meaning that this year’s leadership challenge could be a close one.
In, 2017 MPs accused Camelot of funneling profits away from UK charities. While Camelot experienced rising profits, auditors found that those profits were not being proportionately shared with good causes. According to a report from the National Audit Office, Camelot’s profits had increased over a seven-year period by 122%. Meanwhile, in the year up to April 2017, the National Lottery’s income for good causes saw a drop of 15%.
Meg Hillier, chair of Westminster’s public accounts committee said “Profits increasing while money for good causes falls really does go against the spirit of the act. We need to dig into how such a huge increase in profits can occur”.
In 2018, suspicions about Camelot continued to grow. A 2018 report from the select committee described the 2012 lottery contract negotiations as ‘too favorable’ to Camelot. The lottery operator countered this argument, citing a 30% rise in its returns to good causes. Camelot’s latest ticket sales have been positive. In the six months leading up to September 28th, sales saw a boost of 13.5% to £3.92 billion. Nigel Railton, the company’s Chief Executive claims that the National Lottery is in it’s “best-ever shape”. Whether these sales are enough to save Camelot as their license period comes to an end, time will tell.
“They certainly set out our credentials. They give us good platform for the application process for the next license”
Third Time Lucky for Sir Richard?
Since 1994, the National Lottery has successfully raised more than £40 billion for good causes. Funds are generated from the sale of lottery games and held in the National Lottery Distribution Fund. The Gambling Commission then ensures that this fund is paid out to charitable causes fairly. These good causes include sports, communities, health, education, arts and heritage and the environment.
The deadline for bidders to register interest is in mid-December. An 18-month period will then follow, in which bidders can get their cases together. The overall winner will be selected in 2021, and they will take over the lottery’s operations in 2023.
Branson’s rivalry with Camelot has stood for 25 long years. His first bid for the lottery was in 1994, when it was first launched. Although he wasn’t successful then, his second bid came within a hair’s breadth of being successful. In 2000 Camelot was disqualified from the race. Camelot’s GTech terminals were found to have a software glitch, causing winnings to be miscalculated. As the only other bidder Branson was awarded the bid, only for Camelot’s disqualification to be overturned in the High Court. Camelot managed to snatch back their bid within just one hour of Branson signing the final documents. Branson described the reversal as “a cowardly decision, made in a cowardly way on, to put it mildly, a dubious basis”. Angered by the decision, he vowed never to bid for the lottery again.
“The interest of the good causes should be paramount and that is why we will not be prolonging this sorry farce to appoint a new licensee any longer,” he said. “At some stage, like Al Gore and the American election, you have to bow out.”– Sir Richard Branson, Business Magnate & Founder of Virgin Group
Branson has been openly critical of the way that Camelot runs the lottery. His campaign will focus on modernizing the National Lottery, so that it can compete healthily in today’s gambling industry. This will include priorities such as attracting younger players and competing with online gambling companies. More tickets will need to be sold online to address falling ticket sales. Investments will also be made to improve technology used in the lottery.
According to the Sunday Telegraph, Virgin group representatives have been in talks with the Lottery Competition’s advisers. While they have not yet formally put forward a bid, it is clear that they are compiling a strategy to take on Camelot.
Branson’s Virgin Group has valuable experience in the gaming industry. In 2003 it launched the Virgin Games online casino. This was later acquired by Gamesys in 2013, but still operates under the Virgin brand. Last year Virgin also bought the Hard Rock Las Vegas resort, with plans to transform it into the first Virgin Hotel Casino.
Sir Richard Branson is not the only business mogul to have shown interest in running the National Lottery. Richard Desmond has also shown considerable interest. He runs the Health Lottery through his Northern & Shell Company. Since 2011, the Health Lottery has been raising money for a number of good causes, including helping the elderly. Roughly 20% of its revenue is given to charity. The Health Lottery has often been compared to the National Lottery, but not always positively. In particular, it has been criticized for only giving a small percentage of its income to charity. Sir Stephen Bubb, the former CEO of the Association of Chief Executives of Voluntary Organizations slated Desmond, saying that he was “profiteering on the back of charities”. However, at this time the Health Lottery had not actually generated any profit.
Desmond is the former owner of Express Newspapers and has been featured on the Sunday Times Rich List. Most recent estimates speculate that he has a net worth of £2.6 billion. Desmond announced his ambition to run for the lottery in the Financial Times in 2017. Other bidders could include Novamedia and Sazka. Novamedia is currently the operator of the People’s Postcode Lottery, while Sazka is the continental lottery operator.
The Gambling Commission regulates the National Lottery, and has already appointed a committee for the 2023 license competition. The National Lottery Competition Committee will offer advice to the UKGC’s Board of Commissioners and Chief Executive. Stephen Cohen will chair the Competition Committee. With over 37 years of experience in asset management, Cohen brings to the group a honed perspective on global business and finance. John Baillie, Carol Brady, and Catharine Seddon will accompany him on the committee. Rothschild & Co has also been appointed to lead a team of advisors delivering the competition and engaging bidders.
The Gambling Commission has said that it is “focused on running a fair and open competition”. With 25 years of bitter rivalry, which includes allegations of bribery and court battles, whether the bidders play by the same rules remains to be seen.