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New lottery operator Allwyn has admitted that it will not meet its original pledge on donations to good causes at the start of its decade-long licence.

Blue National Lottery sign, showing its crossed fingers logo, in front of shop entrance.
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Government has been asked to make up for a predicted funding shortfall in arts and culture after the new National Lottery operator, Allwyn, admitted it will be unable to meet its pledged charitable spending targets, which were the basis on which the franchise was awarded.

Speaking in a House of Lords debate on the contribution of the arts to the economy and society last Thursday (1 February), Labour Viscount Chandos said: “Today is the first day of the new lottery franchise, yet the new franchisee has already talked about struggling to match previous years’ [charitable] distribution and a delay in any increase. 

“Does the Minister agree that the award of the franchise to Allwyn by the Gambling Commission appears to have been based on a false prospectus? If, as is now predicted, lottery funding for the arts and other good causes does not meet the original projections on which the franchise was awarded, will the government make up the difference through an increase in the grant-in-aid?”

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Chandos had previously suggested the 'additionality principle' that keeps lottery and government funding distinct might be relaxed to allow for the increased distribution to good causes promised by Allwyn to be used to compensate partly for the real-term reduction in Arts Council granting.

Czech lottery business Allwyn, formerly known as Sazka, replaced Camelot as operator of the National Lottery on 1 February, marking the first time the lucrative licence has changed hands since its introduction in 1994. 

The handover, which follows a contentious and protracted bidding process in which Allwyn ultimately acquired Camelot, sees the Czech company take control of the UK’s largest distributor of charity funds and the fourth-biggest procurement contract awarded by UK government in the past decade.

In its bid, Allwyn promised to raise £38bn for good causes over the next decade, £7.6bn of which would go to the arts (£760m per year). To achieve this, it planned to increase sales of draw-based games that donate a greater proportion of profits to good causes, a disparity that had posed a challenge to Camelot in recent years.

In contrast, Camelot has given £48bn over 29 years. In 2023, it donated around £375m to the arts as well as £375m for heritage.

Change of plan

However, Allwyn cast doubt over its ability to deliver on its charitable goals before it even took the reins, projecting a decrease in the first year of sales. At the end of January, the operator announced that its plans to reduce a ticket from £2 to £1 were under review.

It also revealed that it would delay the introduction of new draw-based games, impacting the money it can give to good causes in the early part of its 10-year licence.

In a statement to the Financial Times, Allwyn said it remained committed to doubling annual funding of good causes by the end of its licence in 2034. 

“The only change to our plans is to the timing due to delays caused by the unsuccessful legal action brought against the Gambling Commission by others,” it added.

Author(s): 
A headshot of Mary Stone

Comments

the so-called 'additionality principle' has been dead for about 20 years now in how ACE has allocated Lottery proceeds, ignoring the government-set Lottery Directives (last revised in 2008). DCMS, supposedly the gate keeper and protector of the principles has done precisely zilch about this, turning a political blind eye to the two separate funding streams being merged in order try and cover up the direct effects of reductions in Treasury grant-in-aid.

The first mistake with the Lottery money was to allow ACE to become the distributor. The arts lottery monies are the result of poorer people buying tickets and scratch cards, whole ACE's core business is artistic excellence. This has created a huge dilemma for ACE. Lottery money should be separated and distributed channel through local government or a dedicated body (like the Big Lottery), with a focus on community-based cultural activities.

This is spot on and I could name the Arts Council Officer who proposed merging the funding streams and drive the policy through. I wish I could recall the rationale. But why would the DCMS want to do anything about it? Merging Lottery and Treasury funding neatly obscures the respective contributions of each and thus makes any central Government reductions much harder to see.