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Lotto

We grant licences for each game, or class of games, promoted as part of the National Lottery. Lotto, EuroMillions, Thunderball, HotPicks, Scratchcards and Interactive Instant Win Games all have their own licences. The licence to run the National Lottery is called the Section 5 licence.

Whenever Camelot want to make changes to any of these games they must apply to us for approval. 

Before we will approve any changes and allow amendments to the game licence or licence additional games we look at issues like:

  • player protection
  • projected returns to good causes
  • protecting player funds
  • legality
  • impact on the National Lottery brand and intellectual property. 

We check that Camelot complies with the terms of those licences. 

Listed below is the history of changes to the Lotto licence and our reasons for agreeing them.

Rationale for agreeing to change the Lotto Jackpot cap
Rationale for agreeing changes to Lotto
Rationale for agreeing Condition 23 Licence Investment Proposal: Additional Lotto Marketing
Rationale for agreeing changes to Lotto


June 2016
Rationale for agreeing to change the Lotto Jackpot cap

Background

In June 2016 Camelot sought approval to change the Lotto Jackpot cap from its current threshold of £55m to £22m. The licence for Lotto was subsequently varied to allow Camelot to introduce the change from August 2016.

In reviewing the request to change Lotto, the Commission considered the proposal in line with our statutory duties, which are:

Propriety

The Commission was satisfied that the change is legal and consistent with the National Lottery brand.

Protecting the Interests of Players

The Commission is satisfied that there should be no negative impact on players from this change.

Returns to Good Causes

Given that we were satisfied on player propriety and player protection, we went on to consider the projected returns to good causes.

We were satisfied with Camelot’s research, which showed that this change would likely have a positive impact upon returns to good causes.


Autumn 2015
Rationale for agreeing changes to Lotto 

In 2013, to re-invigorate the game, the Lotto licence was varied to include an increase in the price of a ticket to £2 and a 2.5% increase in the prize pay-out. These changes enabled an increase in the Match 3 and Match 4 prize values, and the addition of new raffle prizes. 

In 2015, Camelot sought approval for a further change to the Lotto game, as part of a continuous refreshment programme of draw-based games. As with most domestic lottery games across the world, it is likely that Lotto needs continuous innovation to maintain player interest and so a healthy return to good causes. We were convinced by the case put forward and the benefits to good causes that the changes should bring, as well as noting the considerable risks of not continuing to develop the game. 

The changes to the Lotto ball matrix meant that changes were also necessary for HotPicks

The key changes to Lotto include:

  • increase in the number of balls from which the winning numbers are drawn, from 49 to 59
  • addition of a new Match 2 prize tier
  • addition of a new £1million raffle prize
  • change to the existing £20k raffle tier from 50 to 20 winners in every draw
  • removal of the quadruple rollover jackpot cap, to enable higher jackpot levels
  • changes to the way prizes are funded, to increase certainty of prize amounts at certain tiers
  • price of Lotto remains at £2 per line. 

In reviewing the request to change Lotto, we considered the proposal in line with our statutory duties

Propriety (the game is fit and proper)

We were satisfied that the new game:

  • represents a legal lottery, in line with the definition in the Gambling Act 2005
  • is consistent with the National Lottery brand
  • has security measures in place to protect against fraud - from both a systems and processes and player funds perspective. 

As part of its proposed changes to Lotto, Camelot is introducing a new prize tier for matching 2 numbers, which will offer a free lucky dip ticket. In line with the retention model agreed for the third licence, a proportion of the proceeds from those lucky dip ‘sales’ will flow both to Camelot and to good causes in the normal retention proportions. The full cost of the free tickets will be met from the prize fund for each draw. 

We discussed this point and we are content that the Match 2 prize is consistent with our propriety duty. 

Protecting the interests of players

We considered a number of issues such as the risk of excessive play and the potential for play by under 16s, as well as:

  • impact of lengthening the odds of winning the jackpot and thus increasing the probable number of rollovers (jackpot odds moving from 1 in 14m to 1 in 45m)
  • unclaimed prize rates
  • how the new prize funding structure would impact players
  • how the changes will be communicated to players. 

The new prize structure should benefit players, as it should remove the significantly unexpected prize levels seen previously and they will be more likely to receive the prizes they expect from each prize tier. This is because the prize pay-out percentage will now fluctuate with each draw, depending on the number of winners of the fixed prize tiers, similar to the rules that apply for Thunderball and HotPicks games. 

If an individual draw produces a high number of winners, for example because a popular set of numbers have been drawn, the prize pay-out will increase, ensuring that prizes are not significantly impacted, but the contribution to good causes from that draw will be lower than average. Conversely, when a draw produces a low number of winners, the percentage paid in prizes will be lower, but good causes will benefit. The new prize structure should tend towards an average prize pay-out percentage of 47.5%, as it is currently. 

We also considered the impact of the proposed changes on the odds of winning, and how this may be perceived as a negative change by players. Camelot’s research indicated that the majority of players are more interested in prizes than the odds of the game. We noted the balance between odds rising on individual prize tiers with the increased overall chance of winning a prize and the improvement of the odds of becoming a millionaire, as well as the fact the same percentage of sales as before will go to the prize fund. 

Having considered all of these points we were satisfied that permitting the changes to Lotto would be consistent with our statutory duty to protect players. 

Returns to good causes

We were satisfied with the rigour of the process that Camelot had undertaken to design and develop the new game and that this was likely to lead to a positive return for good causes. 

The new prize structure, although designed to protect players’ prizes and ensure consistency, should tend towards an average prize pay-out percentage of 47.5%, as it is currently. We were satisfied with Camelot’s modelling that indicated that over a relatively short period of time, the impact from the new structure on the percentage return to good causes is likely to be neutral. 

Good causes stand to benefit considerably over the course of the current licence which runs to January 2023. We report the amount that goes to good causes every quarter. 

We were satisfied that the changes to Lotto represented a strong proposal for good causes, players and the long term interests of the Lotto game. 

Decision

Based on the information Camelot provided to date, our own considerations of the proposal and taking in to account our statutory duties, we agreed to vary the licence for Lotto. 


Autumn 2015
Rationale for agreeing Condition 23 Licence Investment Proposal: Additional Lotto Marketing 

The proposal requested an annual investment for additional Lotto marketing support. As no retailer commission will be paid on the Match 2 prize tier for free tickets, the investment will be covered by these additional funds flowing to net proceeds. 

Decisions and reasons

We completed an evaluation process which considered the methodology and monitoring processes detailed in the proposal against our statutory duties. We are satisfied that no issues were identified in relation to propriety and player protection. 

We noted in particular:

  • the extra marketing opportunity provided by the additional rollovers forecast as a result of changes to Lotto. 

We decided to accept the proposal as we are satisfied that Condition 23 of the licence had been met and the investment:

  • will secure an increase in the net proceeds of the National Lottery
  • will continue to ensure that the National Lottery is run will all due propriety and the interests of every participant in the National Lottery are protected. 

We will review the investment on a six-monthly basis and can amend the amount that is invested annually or cease to invest entirely at any point if it has concerns with its performance. 


Autumn 2013
Rationale for agreeing changes to Lotto 

In 1994, Lotto launched at the price point of £1 and in 1997 a mid-week draw was introduced. Since its launch the range of National Lottery games available has evolved, but the core Lotto game has remained unchanged. Over this time, interest in Lotto has fallen, resulting in declining sales, lower jackpot prize levels and a resulting decrease in funding given to the good causes supported by the National Lottery. 

In an effort to reinvigorate the Lotto game and prevent falling sales, Camelot proposed changes to the Lotto game which we approved in December 2012 after careful consideration. We were convinced that changes needed to be made to maintain the attractiveness of the Lotto game, and satisfied that the significant benefits offered by the revised game were not possible at the previous game price. 

The key changes to Lotto included:

  • increase in ticket price from £1 to £2
  • increase in the jackpot (based on expected sales)
  • 2.5% increase in the prize pay-out (from 45% to 47.5%)
  • new weekly raffle of 50 £20,000 winners
  • increased numbers of raffle prizes in line with rollovers
  • increase in prize for matching 3 balls (from £10 to £25)
  • increase in prize for matching 4 balls (from £62 to £100 on average)
  • reduced prize for matching 5 balls (from £1500 to £1000 on average)
  • reduced prize for matching 5 balls plus bonus ball (from £100k to £50k on average)

In reviewing the request to change Lotto, we considered the proposal in line with our statutory duties. 

Propriety (the game is fit and proper)

We were satisfied that the new game:

  • represents a legal lottery, in line with the definition in the Gambling Act 2005
  • is consistent with the National Lottery brand
  • security measures are in place to protect against fraud - from both a systems and processes and player funds perspective. 

Protecting the interests of players

We considered a number of issues in relation to this duty, such as the risk of excessive play and the potential for play by under 16s, as well as:

  • player comprehension
  • results checking for the raffle element
  • unclaimed prizes. 

As the enhanced game offered a more complex structure, we felt it was essential that all players would be able to comprehend the changes. Assurance was taken from the ease of implementing the EuroMillions Raffles, in November 2009, in which no significant player comprehension problems arose. In addition Camelot made the raffle easier to check by introducing a colour prefix to the raffle tickets and providing a win checker on their website. 

We also considered the impact of the proposed changes upon players who use fixed numbers. The consideration of the use of fixed numbers has not been a commercial driver in the approval decision, but from a player perspective we acknowledge that some will have a decision to make regarding whether they continue to play Lotto at their current levels. We understand if this is a difficult decision to take but we are confident that Lotto players will be able to make such a decision. 

We do recognise the importance of National Lottery products remaining accessible to a wide range of players and we continue to ensure that there is a wide portfolio of games available at a range of price points with online instant win games starting from 25p and Thunderball for £1. 

Having considered all of these points we were satisfied that permitting the changes to Lotto would be consistent with our statutory duty to protect players. 

Returns to good causes

The percentage paid to the player increased from 45% to 47.5% which means that a greater percentage of funds are going back to the player in prizes. Because of the new raffle element to the game, the chances of winning have also slightly increased. 

The financial benefits for Camelot and good causes are closely aligned. Camelot’s returns rise and fall in line with increases and decreases in the returns generated for good causes. This means that we can place a degree of reliance on Camelot’s commercial judgement and do not need to ‘double-guess’ Camelot’s research and game design processes as long as we are confident that a robust process has been undertaken, which we are. 

Decision

Based on increased sales projections provided by Camelot, good causes stand to benefit considerably over the course of the current licence to operate the National Lottery which runs to January 2023. We were satisfied that the changes to Lotto represented a strong proposal for good causes, players and the long term interests of the Lotto game.