Tough Challenge Ahead for UK National Lottery

The U.K. National Lottery Commission said in its report for the year 2003/2004 that ticket sales increased by 1 percent over the previous one-year period--the first such increase in five years. The commission is confident that bigger jackpots and a greater emphasis on the Internet play and newer games will fuel sales further, but it wasn't all good news for the National Lottery.

The lottery will need a near record year in 2004/2005 to reach the same levels of fund raising for good causes in the United Kingdom.

Ticket sales were boosted during the summer months thanks in large part to the lottery's first ever triple-rollover on May 29, which resulted in a sales spike of £68.4 million, plus 27 double-rollovers (more than twice the amount during the previous year). Rollovers are key for the National Lottery because they increase sales by an average of 10 percent.

Nevertheless, Camelot, the sole National Lottery operator, faces an uphill battle. The group raised £10.2 billion for good causes during its first licensing period. If the current sales rate holds, the National Lottery will come up £500 million short.

And while the 1 percent increase was the fist positive turn in more than five years, the total sales of £4.62 billion marked the second lowest full-year sales figure in the 10 years Camelot has been in operation.

The lottery's biggest challenge could be promoting new games and opening new delivery channels despite British consumers' tendency to stick with what's familiar.

Lotto sales represent 70 percent of total sales for the National Lottery, and when ticket sales drop, they typically aren't offset by increased spending on other games.

In other countries, the report states, lotto sales form less than 50 percent of the lottery portfolio.

British consumers haven't yet warmed to the lottery's attempt to diversify its portfolio of games. Two new games, Scratchcards and Thunderball, have been popular, but the rest of the games combined account for only 8 percent of sales.

A survey of National Lottery players conducted last year showed that 69 percent of them thought there were too many games. (The National Lottery has eight games with 13 draws a week.)

One new game, Lotto Extra, was launched with hopes of creating £50 million jackpots, but the jackpots have hovered around £15 million and seldom go over £20 million.

Jackpots for EuroMillions, the multinational European lottery in which the U.K. National Lottery is a partner, have been disappointingly low as well, but Mark Harris, chief executive of the commission, said the huge jackpots originally expected will come when more jurisdictions get on board.

The National Lottery also hopes to continue developing interactive channels. It has already begun to utilize the Internet, and Commission Chairman Moira Black said an emphasis will be placed this year on mobile games.

Black also gave her staff a vote of confidence entering the challenging year to come

"The continued hard work and efforts of the team at the commission ensures that the National Lottery continues to operate in a well regulated environment," she said in her forward to the report. "This year we celebrate 10 years of the National Lottery and while the market is changing rapidly, we are looking ahead to consider and safeguard its future."

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