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National Lottery third licence breaches

Licence breaches recorded during the third licence period (2009-2019) 

During the 2016/2017 financial year

Prize claim control failings

Background

The Commission commenced an investigation following an allegation that a fraudulent
National Lottery prize claim had been made and paid out in 2009.

Condition

Condition 5.1 requires the Licensee to ensure that at all times its running of the
National Lottery is Fit for Purpose, as that phrase is defined in the Licence.

Condition 5.10A(b) of the Licence to operate the National Lottery requires Camelot to ensure that all Processes and Procedures are Fit for Purpose.

Condition 5.15(a) requires that the Licensee shall ensure the security of all equipment, systems, data, ticket materials and other consumables used in connection with the National Lottery and any Constituent Lottery and all proceeds arising from any Constituent Lottery and Ancillary activity, so as to minimise opportunities for theft, fraud or misuse.

Condition 5.17 requires the Licensee to ensure that any data and other information relating to any Constituent Lottery cannot be accessed, read, added to, removed or altered by unauthorised persons.

Condition 14.8 requires that the Licensee shall demonstrate that it:
(d) has satisfactory segregation of duties for all lottery processes and procedures;
(e) has a reliable audit trail for all processes and procedures relating to the running of the National Lottery.

Description

The Gambling Commission has imposed a financial penalty of £3 million on Camelot, the operator of the National Lottery. 

This follows an in-depth investigation relating to an allegation that a fraudulent National Lottery prize claim had been made and paid out in 2009, but which only came to light last year and was then immediately brought to the attention of the Commission and the Police. 

The Commission found that Camelot had breached the terms of its operating licence in three key aspects: 

  • its controls relating to databases and other information sources;
  • the way it investigated a prize claim
  • its processes around the decision to pay a prize. 

The Commission’s investigation into this issue found that, whilst it could not be certain a fraud had taken place, it was more likely than not that a fraudulent prize claim had been made and paid out. 

Camelot has accepted the findings and will not be exercising its right to appeal the regulatory decision. 

The £3m penalty package has been paid by Camelot and is for the benefit of good causes. This includes £2.5million to represent the amount that would have been received by good causes had the prize claim not been paid. 

The Commission’s investigation has established that the circumstances of this case were specific and did not uncover systemic failings of the kind that would call into question other prize payouts. 

When this matter came to light Camelot immediately took action to ensure a similar issue could not occur and commissioned external assurance of its controls and processes around prize payouts. Key changes to strengthen these processes have now been implemented. 

Regulatory action

Following a detailed investigation of Camelot’s control environment and processes for mitigating the risk of a fraudulent prize claim being paid, the Commission concluded there had been breaches of the Licence in the following respects:

  • Failings in relation to controls amounted to a breach of conditions 5.10A(b), 14.8(d), 14.8(e), 5.15(a) and 5.17 of the licence
  • Failings in relation to the prize claim investigation amounted to a breach of conditions 14.8(e) and 5.10A(b) of the licence
  • Failings in relation to the decision to pay the prize claim, amounted to a breach of conditions 14.8(e) and 5.10A(b) of the licence.

The Commission also concluded that cumulatively these failings amounted to a breach of condition 5.1 of the licence.

Outcome

The Commission concluded that a financial penalty of £3m was appropriate.

In determining the amount of the financial penalty the Commission took account of its Enforcement Policy, the Directions and section 10A(2) of the National Lottery etc. Act 1993. Having done so the Commission concluded that was a proportionate penalty given the seriousness of the breaches of licence condition, the duration of the breaches and the fact that, whilst it could not be certain a fraud had taken place, the Commission considered it more likely than not that there had been a loss to good causes of approximately £2.5m that was attributable to the breaches found.

A licence breach and financial penalty was recorded on 16 December 2016.

Camelot's Response

Camelot has accepted the Commission’s conclusions.

Furthermore, when this matter came to light Camelot immediately took action to ensure a similar issue could not occur and commissioned external assurance of its controls and processes around prize payouts. Key changes to strengthen these processes have now been implemented.

Incorrect Lotto Millionaire Raffle results number published on website

Background

The Lotto draw held on Saturday 10 October 2015 was a launch event for the refreshed game. The launch promotion included 45 Lotto Millionaire Raffle prizes consisting of 25 £1m prizes and 20 £20,000 prizes.

Condition

Condition 5.10A(b) of the Licence to operate the National Lottery requires Camelot to ensure that all Processes and Procedures are Fit for Purpose.

Condition 7.42 of the Licence requires Camelot to ensure that material to enable a Player to play in a Constituent Lottery is accurate, does not mislead players and is compatible with the terms and conditions, rules, procedures and game specific rules of the Constituent Lottery. 

Description

Following the Lotto draw on the 10 October 2015 Camelot published the incorrect Millionaire Maker Raffle results for the 45 prizes. This incorrect information remained on the website for one hour.

This resulted in players being misled as to the winning numbers for the 45 Millionaire Maker Raffle prizes. Following detection of the error, Camelot took some steps to correct the information which had been published and to inform the public of the correct results.

Camelot has also since undertaken action to improve its digital content generation controls.

Regulatory action

The Commission undertook a full investigation, including seeking representations on the circumstances of the error from Camelot. The Commission concluded that there was a contravention of the licence requirements and a licence breach was recorded on 23 June 2016.

Outcome

A financial penalty of £300,000 was imposed.

In addition the Commission noted to Camelot that:

  • it took too long for a clear and explicit correction to be made and that the Commission expects an improvement in its approach to any future issues
  • the Commission is going to engage with Camelot on its control environment framework, with particular reference to digital content generation.

Incorrect EuroMillions jackpot advert details on results checker page published on website

Background

The EuroMillions results checker page provides details of what upcoming jackpot promotions and prizes are available in future draws.

Condition

Condition 5.10A(b) of the Licence to operate the National Lottery requires Camelot to ensure that all Processes and Procedures are Fit for Purpose.

Description

On 5 November 2015 an incorrect jackpot advert was published on the EuroMillions results checker page. It stated that there were ten prizes of £1million each instead of one. Following detection of the error, Camelot took steps to correct the information which had been published.

This resulted in players being misled as to the forthcoming promotion that was being offered for the game.

Regulatory action

The Commission undertook a full investigation, including seeking representations on the circumstances of the error from Camelot. The Commission concluded that there was a contravention of the licence requirements and a licence breach was recorded on 23 June 2016.

Incorrect Lotto Raffle information details on temporary results page published on website

Background

The EuroMillions temporary static results page is enabled when issues arise regarding the volume of traffic going to the website.

Condition

Condition 5.10A(b) of the Licence to operate the National Lottery requires Camelot to ensure that all Processes and Procedures are Fit for Purpose.

Description

On 27 December 2015 the incorrect Lotto Raffle top prize tier details were published on the static results page for EuroMillions. It displayed an incorrect message for prize tier 1 as being “5 prizes at £20,000” when it should have been “5 prizes at £1million” and for prize tier 2 as being “20 prizes of £” when it should have been “”20 prizes of £20,000”. Following detection of the error, Camelot took steps to correct the information which had been published.

This resulted in players being misled as to the forthcoming promotion that was being offered for the game.

Regulatory action

The Commission undertook a full investigation, including seeking representations on the circumstances of the error from Camelot. The Commission concluded that there was a contravention of the licence requirements and a licence breach was recorded on 23 June 2016.

During the 2015/2016 financial year

There was no breaches recorded during this period.

During the 2014/2015 financial year 

Lotto Jackpot calculation error 

Background

The Lotto draw held on Saturday 19 October 2013 was a single rollover from Wednesday 16 October 2013, with three jackpot winning tickets sharing the jackpot originally broadcast as £6.2m and subsequently recalculated to £4.8m. 

Condition

Condition 5.10(A)(b) of the Licence to operate the National Lottery requires Camelot to ensure that all processes and procedures are fit for purpose. 

Description

Following the Lotto draw on 19 October 2013 Camelot incorrectly calculated the Lotto jackpot prize tier. 

This resulted in the incorrect Lotto jackpot prize being published and communicated to the three jackpot winning ticket holders, who were initially told that they had each won £2.1m, when the correct amount was £1.6m. 

Following detection of the error, Camelot took steps to correct the information which had been published and to inform the three jackpot winners of the correct amount before any prize money had been transferred. 

The Commission is satisfied that all players received the correct prize amount under the rules of the game. 

Regulatory action

The Commission undertook a full investigation, including seeking representations on the circumstances of the error from Camelot. 

The Commission's view is that there was a contravention of the licence requirements and a licence breach was recorded on 26 August 2014. 

Outcome

A financial penalty of £100,000 was imposed, together with a direction that Camelot commissions an independent review, subject to consultation on scope, of its control environment performance as provided for under Condition 17 of the Licence.

While the Commission considers that this is an isolated incident, it views it as an extremely serious matter, as confidence in the accurate calculation of prize monies is a critical part of maintaining public trust in the integrity of the National Lottery. 

The Commission is satisfied that Camelot has accepted the finding of a breach and co-operated fully in the investigation 

During the 2013/2014 financial year 

Scrabble Scratchcard misprint

Background

The Scrabble Scratchcard in question was launched in December 2012 with a top prize of £80,000. 

Condition

Condition 7.42 of the Licence requires Camelot to ensure that material to enable a Player to play in a Constituent Lottery is accurate, does not mislead players and is compatible with the terms and conditions, rules, procedures and game specific rules of the Constituent Lottery. 

Description

As a result of printing and design errors, at least 30 Players were misled and as a result thought that they had won sums which they had not. On at least 15 of those occasions, Players were led to believe that they had won the jackpot of £80,000 when they had not. All players received the correct prize that they were entitled under the rules of the game. 

Regulatory action

The Commission’s view is that this incident was a contravention of the licence requirements and represents one licence breach which was recorded on 13 March 2014. 

Outcome

The Commission is satisfied that all players received the prizes to which they were entitled under the rules of the game, even if the play experience was significantly impacted in a negative way. Camelot asserts that it has taken measures to prevent reoccurrence of this incident. 

Animation errors in Monopoly and Passport to Prizes Interactive Instant Win Games

Background

Camelot offers interactive instant win games on the National Lottery website. 

Condition

Condition 7.42 of the Licence requires Camelot to ensure that material to enable a Player to play in a Constituent Lottery is accurate, does not mislead players and is compatible with the terms and conditions, rules, procedures and game specific rules of the Constituent Lottery. 

Description

On a number of occasions between January and April 2012 there were errors with two interactive instant win games which resulted in players seeing misleading animation indicating that they had either won a prize when they had not or had won a prize greater than they had actually won. All players received the correct prize that they were entitled under the rules of the game. 

The details of the individual instances were:

Between 25 January 2012 and 26 January 2012, 30 players of the Monopoly game were presented with a misleading animation. Two of those players were presented with an animation which indicated that they had won £1 million which they had not. 

Between 16 February 2012 and 26 February 2012, at least five players of the Monopoly game were presented with a misleading animation. Two of those players who complained were presented with an animation which indicated that they had won £50,000 and £1 million respectively which they had not. 

On 22 February 2012, at least 10 players of the Passport for Prizes game were presented with a misleading animation indicating that they had won sums of £100 which they had not. 

Between 3 April 2012 and 25 April 2012 at least one player of the Monopoly IWG game was presented with misleading animation indicating that they had won £10,000 which they had not. 

Regulatory action

The Commission’s view is that these instances were a contravention of the licence requirements and represent four licence breaches which were recorded on 4 July 2013. 

Outcome

The Commission is satisfied that all players received the prizes to which they were entitled under the rules of the game, even if the play experience was significantly impacted in a negative way. Camelot asserts that it has corrected the faults that caused the animation errors and has taken steps to improve its testing arrangements to reduce the risk of this happening again. 

During the 2010/2011 financial year 

Incorrect Lotto draw result number on National Lottery website

Background

Camelot publishes the results of draws on the National Lottery website where players can check if they have won a prize. 

Conditions

Condition 7.42 of the Licence to operate the National Lottery requires Camelot to ensure that certain information published on its website is accurate and does not mislead players, this includes the publication of draw results. 

Description

The Commission was informed by Camelot that one of the numbers selected in the Lotto draw, which took place on 23 September 2009, was incorrectly published on the National Lottery website for approximately 3 hours on 24 September. The number 45 was displayed when it should have been the number 46. 

Camelot has been unable to verify precisely the time at which the incorrect figure was published on the website, but the error was corrected by 4.00am. On average there were approximately 9,000 visits per hour to the results page during the period between 1.00am and 4.00am. Players who visited the results page while the incorrect number was published and relied on the results page to check their entitlement to a prize may have been misled, either as to whether they were entitled to a prize or as to the value of that prize. 

The problem was caused by human error. The standard process to automatically import results to the National Lottery website had failed to complete and attempts to rectify this also failed. A manual process to update the results page was therefore used and an error in entering one number introduced. 

It is likely that for only a small number of players this would have had a detrimental effect; those who purchased their tickets at retail; checked their tickets on line and had won the match 3 (£10) prize with number 46 as one of their winning numbers. All players would have obtained the correct prize, if they subsequently made a claim. 

Regulatory action

The Commission’s view is that there were contraventions of licence requirements and a licence breach was recorded on 14 May 2010. 

Outcome

The Commission is satisfied that the case resulted from problems with the automated entry of results to the website and subsequent human error when manually updating the results page. 

Camelot has commented that process improvements have been put in place to reduce the risk of this happening again. 

Point of sale advertising cube for the EuroMillions SMJG Event draw on 5 February 2010

Background

Camelot provides retailers with point of sale advertising and promotional material for Lottery games, including EuroMillions. 

Conditions

Condition 7.42 requires that the Licensee shall ensure any National Lottery promotional material in connection with games is accurate and does not mislead players. 

Description

Camelot distributed point of sale material to retailers to promote the EuroMillions Super Minimum Jackpot Guarantee (SMJG) event draw on 5 February 2010. The materials included a cardboard cube for display and were sent to retailers more than a week prior to the draw. The cube promoted an estimated jackpot of £85 million, but failed to include the date of the draw on every face of the cube. 

Whilst the date of the draw was clearly stated on other point of sale items, it is possible that players who saw only the cube might have incorrectly concluded that the jackpot of £85 million applied to the previous week’s draw. 

This followed an occurrence in September 2009 when a similar cube was distributed to retailers prior to the September 2009 SMJG event draw. A player complaint brought the matter to the Commission attention, and in October 2009 Camelot assured us that in future the relevant draw date would be clearly stated on all six sides. However this was not communicated within Camelot due to turnover of staff in the marketing team and as a consequence in February 2010 the promotional material was reprinted in the same format. 

Regulatory action

The Commission’s view is that there was a contravention of licence requirements and a licence breach was recorded on 14 May 2010.

Outcome

Camelot has commented that they will ensure there is no recurrence. 

During the 2009/2010 financial year 

Dream Number tickets

Background

Dream Number is a National Lottery game with prizes ranging from £2 to £500,000. 

Condition

Condition 7.42 of the Third Licence to operate the National Lottery, granted under section 5 of the National Lottery etc. Act 1993 (as amended) requires that any material designed to encourage or enable someone to play a National Lottery game must be accurate and does not mislead. 

Description

Between 1 February and 28 March 2009 some Dream Number tickets featured Dream Numbers which were not consistent with those entered into the draw. The situation arose only in specific circumstances, that is when players requested a Lucky Dip selection for Dream Number only and the National Lottery gaming system executed a retry before completing the process of printing the ticket. Camelot became aware of the problem following a complaint from a player. 

The inconsistencies were due to a software error which had occurred when the new gaming system was implemented on 1 February 2009. The software error had no connection to that which resulted in earlier problems with Dream Number during 2008/09. 

In 75 cases players received tickets which incorrectly indicated they were entitled to prizes of between £2 and £500. In total eight of these tickets have been presented to Camelot.

In 53 cases players would not have known that they were entitled to a prize as the number printed on their ticket was inaccurate. None of these 53 tickets (which would have received prizes of £2 and £100) have been presented for prize payment and Camelot is unable to trace the holders of the tickets. 

Regulatory action

The Commission concluded that there had been a contravention of Condition 7.42. A licence breach was recorded on 10 November 2009 

Outcome

The Commission is satisfied that the problems were caused by a software error which arose in the new gaming system. Camelot’s implemented a software fix in March 2009 and no further problems have been reported to the Commission. 

Daily Play tickets

Background

Camelot introduced a new gaming system on 1 February 2009. In preparation for this a series of data transfers were undertaken during a period when both the old and new systems were running simultaneously. The transfer of historic data was to allow for a period of testing and monitoring prior to switching to the new system, and for the subsequent operation of the new system from 1 February 2009. The data included information needed for prize validation purposes. 

Condition

Condition 7.43(a) and (b) of the Third Licence to operate the National Lottery, granted under section 5 of the National Lottery etc. Act 1993 (as amended) requires that players are able to find out whether they have won a prize and that prizes are paid to those people who have claimed them. 

Description

A prize of a free Daily Play Luck Dip ticket is awarded to those players who fail to match one of the Daily Play numbers drawn (Match 0). As a result of a data conversion error some Daily Play Match 0 prizes were not recognised, these were for tickets purchased at retail before 1 February 2009 but validated after that date. In the case of 32 tickets the gaming system recognised only one Daily Play Match 0 prize when more than one of these prizes could be attributed to a ticket. In total 37 free Daily Play prizes were not provided when the tickets were validated. 

Regulatory action

The Commission has considered Camelot’s explanation that the error was unique, arose during the significant and complex data conversion necessary to enter the Third Licence and was rectified effectively within 6 days. However, the Commission has concluded that because some players may have been unable to find out if they had won Daily Play Match 0 prizes and some players did not receive the prizes they had claimed, the circumstances amount to a breach of Condition 7.43 (a) and (b). The licence breach was recorded on 6 November 2009 

Outcome

Camelot implemented a software fix on 8 February 2009 and this resolved the issue. It has not been possible for Camelot to identify those individuals who did not receive the correct number of free Daily Play tickets for multiple Match 0 winning lines. 

Prize Payment Security System 

Background

As operator of the National Lottery, Camelot is required to put in place arrangements to ensure the security of funds for players who have entered National Lottery games and prizes for the winners of those games as well as security for the funds which are due to be paid to the good causes. These arrangements take the form of the Players’ Trust which is overseen by an independent Trustee. 

Camelot is also required to put in place arrangements such that (for example if Camelot became insolvent) the trustee or any receiver appointed by the Trustee would be able to properly discharge their duties (for example by repaying funds to players or paying prize winners). These arrangements are known as the Prize Payment Security System (PPSS).

The specification and functionality of PPSS is set out in a document which is approved by the Commission and must be complied with by Camelot. 

Condition

Condition 5.12B(h) of the Third Licence to operate the National Lottery, granted under section 5 of the National Lottery etc. Act 1993 (as amended) requires that approved procedures must be complied with.

Description

In March 2009 Camelot made changes to the National Lottery gaming system, however it failed to make compatible changes to PPSS. As a consequence for the period 4 March 2009 to 12 May 2009 PPSS would not have been able to perform as expected. Had circumstances arisen which would have required the operation of PPSS, for example if Camelot had become insolvent during the period, the Trustee’s ability to perform its functions would have been compromised, with potentially serious consequences.

Regulatory action

The Commission has considered the circumstances which led to this failure. It has noted that Camelot accepts that the PPSS arrangements are an important measure required by the Commission to protect players’ interests and regrets that the error occurred. Camelot also explained that the failure was due to an error by a third party carrying out the system changes. 

The Commission has concluded that there was a breach of Condition 5.12B (h). The licence breach was recorded on 23 November 2009 

Outcome

The problem with PPSS was fixed in May 2009. 

Player Guide 

Background

To ensure players have accurate and up-to-date information about National Lottery games, the National Lottery Commission requires Camelot to adopt, maintain and comply with a Player Guide, which is approved by the Commission. Camelot must ensure that any material designed to encourage or enable a player to enter into or play a Lottery game is accurate, does not mislead players and is compatible with game rules and procedures.

A Player Guide explaining how to play National Lottery games, the prize structures and general game information is provided as a free leaflet at retailers. Similar material is provided on the National Lottery website for interactive players. 

Condition

The Conditions that cover the information in the Player Guide are 7.21(a) and 7.42 of the third Licence to operate the National Lottery, granted under Section 5 of the National Lottery etc. Act 1993 (as amended). 

Description

Player Guides produced by Camelot for the third licence contained inaccuracies and were not in line with the versions approved by the Commission. Issue number 14 Version contained the following errors against the approved versions:

the lowest prize category in the EuroMillions game was ‘Match … 2 main numbers.’ The correct approved position is ‘Match … 2 main numbers + 1 Lucky Star;the approximate odds of winning the Lotto jackpot was incorrectly stated as ’(1 in) 3,983,816.’ The correct and approved statement is ’(1 in) 13,983,816’;the approximate odds of matching the first five digits on Dream Number was incorrectly stated as (I, in) ‘I I I , I .’ The correct and approved statement is (1 in) ‘111,112’;a header ‘Best Shot’ was included in the Thunderball section of the guide which had the potential to mislead players into believing that the Thunderball game offers the best odds of winning a National Lottery game; and a statement was included in the Thunderball section of the guide which had the potential to mislead players into believing that they could win a prize of a new sports car as opposed to a financial prize.

Version 1 of the Guide was removed by Camelot from retail outlets in mid-February 2009. A subsequent version of the Player Guide, issue number 14 Version 2 had not corrected the last two inaccuracies, although these had been brought to the attention of Camelot. 

Regulatory action

The Commission considered Camelot’s explanation for the errors, which included staff workloads and time constraints during the transition to the third Licence, but considered the mistakes occurred due to a failure in quality control. In light of this the Commission has concluded that there were two breaches of the Licence. The Licence breaches were recorded on 16 July 2009. 

Outcome

Camelot has since reviewed this case and improved its quality control arrangements for the issuing of player documents.