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Licence to run the National Lottery

We grant licences for each game, or class of games, promoted as part of the National Lottery. Lotto, EuroMillionsThunderballLottoHotPicks
EuromillionsHotPicks, Set For LifeScratchcards and Interactive Instant Win Games all have their own licences.

We awarded Camelot a ten year licence to run the National Lottery, starting in 2009. In March 2012 this was extended by four years. This licence is called the Section 5 licence.

Over this 14 year period we will amend our regulatory regime where appropriate, including the terms of the licence, to do the following:

  • cut bureaucracy
  • give Camelot more freedom
  • better protect Lottery players and the money they raise for good causes.

The Section 5 licence requires Camelot to submit information and policies to us for approval. You can see these decisions in Approvals, consents, variations, disapplications and waivers.

Definition of terms for Section 5 licence decisions

Approvals

Some provisions of the licence require Camelot to submit information or issues to us for approval. For example, their Strategy to prevent underage play. The licence generally requires Camelot to seek our approval if the issue might have an impact on the National Lottery that we need to understand.

Consent

Similar to the process for approval, we agree to allow Camelot to pursue a course of action.

Variation

We make a permanent change to a licence provision. Some licence provisions can only be changed with Camelot’s consent. In other cases we can impose a variation. Reasons for making a variation include:

  • a change in circumstances which means the licence doesn’t regulate Camelot as it should
  • there is a lack of clarity about what is required
  • if Camelot acts in a way we feel is inappropriate and which we wish to regulate in future.

Waiver

We excuse Camelot from its obligation to comply with a licence requirement in one particular set of circumstances.

For example, Camelot has to have a retailer in every postcode district that has more than 2000 residents. Camelot is unable to do so if there are very few retailers in that district and those that are there refuse to take a National Lottery terminal. In such cases we can waive the licence obligation insofar as it applies to that area.

Disapplications

We aim to remove regulatory burdens where Camelot has a strong proven track record. A disapplication means that we have removed one of the obligations on Camelot from the licence.

For example, it is no longer required to display U16 notices in shops. It’s not a variation because we can, if we consider it appropriate, reinstate the provision as it was originally set out in the licence.

Approvals, consents, variations and waivers also apply in relation to the licences to individual National Lottery games. To date there have been no disapplication of individual game licences.

August 2019

August 2019

Rationale for agreeing Condition 23 Licence Investment Proposal: Brand Marketing Investment

Summary

  • On 10 June 2019, Camelot UK Lotteries Limited (Camelot) served the Gambling Commission (the Commission) with a modified Licensee Notice of Investment Opportunity (the proposal) in accordance with the provisions of Condition 23 of the Section 5 Third National Lottery Licence (the Licence).
  • The proposal requested an investment in marketing from the National Lottery Distribution Fund (NLDF) for the 2019/20 financial year, to support the National Lottery brand. The investment would support the long-term health of the National Lottery by driving positivity, loyalty and an emotional connection to the brand. Camelot is also investing in capital expenditure as part of the overall proposal.
  • The Licence provides that at the end of an evaluation process, the Commission may accept a proposal, propose modifications to a proposal, or reject a proposal. That decision is subject to the Commission’s overriding statutory duties to secure that:
    • The National Lottery is run, and every lottery that forms part of it is promoted, with all due propriety;
    • The interests of every participant in a lottery that forms part of the National Lottery are protected; and
    • Subject to the above two provisos, that the net proceeds of the National Lottery are as great as possible.
  • The evaluation process undertaken by the Commission regarding this proposal has been both robust and extensive, utilising the support of external experts where necessary.
  • As a result of this process, and significant engagement with Camelot, modifications were made to the original proposal prior to a decision being made. These included:
    • A reduced NLDF investment for brand marketing and enabling spend of £12.1m (reduced from £27.2m)
    • Camelot to contribute the remaining funding for the brand investment to ensure the optimum £36.0m identified in Camelot’s proposal is committed to brand spend
  • Following the conclusion of this evaluation process, the Commission approved the proposal (as revised and improved), as the Commission was satisfied that the proposal is likely to:
    • Continue to ensure that the National Lottery is run with all due propriety;
    • the interests of every participant in the National Lottery are protected, and;
    • Secure an increase in the net proceeds of the National Lottery

Decision and rationale

  • The detailed assessment completed by Officials of the proposal, and the findings of the Commission’s external specialists, provide assurance the proposal has a strong strategic basis and a high level of assurance the investment will deliver incremental benefits to Good Causes particularly in the long-term.

Propriety

  • The Commission is satisfied the proposal is unlikely to have an adverse impact on the running of the National Lottery with all due propriety.

Player interests

  • The potential impacts of the proposal regarding player interests are limited. We do note however, that consumers are likely to see additional advertising as a result of this decision. The Commission will continue to challenge Camelot on its wider progression in terms of player protection measures. Accounting for this broader activity, we are therefore satisfied that the interests of every participant in a lottery that forms part of the National Lottery are protected.

Returns to Good Causes

  • Camelot’s forecasts have been scrutinised by Officials and the Commission’s external advisors to ensure that Good Cause returns on the investment are positive in all plausible scenarios.
  • Investment in the brand provides longer-term benefits to the National Lottery, as it should improve positivity and enhance the link between play and good causes.
  • Without investment into the brand, player sentiment and participation are likely to continue to decline. Consequently, this could impact on the appeal of bidding for the fourth licence competition which in turn may impact on good causes for the fourth licence period

Decision

  • Based on the information provided by Camelot and our considerations on propriety, player interests and returns to good causes, the proposal was approved.

August 2019

August 2019

Rationale for agreeing Condition 23 Licence Investment Proposal: Retailers and Self-Checkout Investment

Summary

  • On 7 February 2019, Camelot served the Gambling Commission with a modified Licensee Notice of Investment Opportunity (the proposal) in accordance with the provisions of Condition 23 of the Section 5 Third National Lottery Licence (the Licence).
  • The proposal requested investment from Good Causes in retail infrastructure i.e. expansion of the National Lottery into discounters, and introduction of the National lottery at self-checkout in major supermarkets.
  • The Licence provides that at the end of an evaluation process, the Commission may accept a proposal, propose modifications to a proposal, or reject a proposal. The decision is subject to the Commission’s overriding statutory duties to secure that:
    • the National Lottery is run, and every lottery that forms part of it is promoted, with all due propriety;
    • the interests of every participant in a lottery that forms part of the National Lottery are protected; and
    • Subject to the provisos in (a) and (b), that the net proceeds of the National Lottery are as great as possible.
  • The evaluation process undertaken by the Commission regarding this proposal has been both robust and extensive, utilising the support of external experts where necessary.
  • Following the conclusion of this evaluation process, modifications were made to the original proposal which included:
    • Camelot to provide an additional £1.0m of incremental capital expenditure across discounters and self-checkout.
    • a reduction in the investment from good causes, from £14.1m to £13.1m
    • wording to allow either party to cease the investment should it not provide adequate returns.
  • The proposal (as revised and improved), satisfied the Commission in that the proposal is likely to:
    • Secure a significant increase in the net proceeds of the National Lottery; and
    • Continue to ensure that the National Lottery is run with all due propriety and the interests of every participant in the National Lottery are protected.

Decision and rationale

  • The detailed assessment completed by Officials, and the findings of external specialists, provide assurance the proposal has a strong strategic basis and a high level of assurance the investment will deliver significant incremental benefits to Good Causes.
  • The rationale behind this proposal is to evolve the retail offering in line with the changes in the retail landscape and to ensure that the National Lottery is present both where and how customers are shopping.

Propriety

  • The Commission is satisfied that the proposal is unlikely to have an adverse impact on the running of the National Lottery with all due propriety.

Player interests

  • The potential impact regarding player interests has been considered fully during Officials’ assessment of the proposal, including the impact on underage and problem play. No risks have been identified that cause Officials to conclude that the proposal is likely to have an adverse impact on our statutory duty to protect the interests of players.
  • Officials’ view is that this proposal would be beneficial to consumers by making the purchase of National Lottery tickets more convenient and in line with shopping trends.

Returns to Good Causes

  • The overall investment is highly positive for Good Causes.  Camelot is contributing 13% of the overall investment with Good Causes forecast to receive around 97% of the gross benefit.
  • Camelot’s forecasts have been scrutinised by Officials and the Commission’s external advisors to ensure that Good Cause returns on the investment are positive in all plausible scenarios.
  • The conclusion from this work is therefore that the proposal is likely to deliver substantial additional Returns to Good Causes till the end of the current licence period.
Also see

National Lottery Section 5 licence

The licence to run the National Lottery

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