UK National Lottery Bidding to Include Tech, Financial Companies
The UK Gambling Commission is accepting bidders to operate the country’s next National Lottery licenses, according to commission chairman Neil McArthur. The United Kingdom’s gaming regulator will open bidding to a wide variety of bidders early next year, said McArthur.
The current National Lottery license runs through 2023. This will be the fourth time the license has been opened for bidding, though the process is expected to be much different this time around.
This is the first time the UK Gambling Commission has handled bidding for the National Lottery.
When bidding last took place in 2013, it was before the Gambling Commission merged with the National Lottery Commission.
2019 National Lottery License Bidding
Last time, bidding received less interest than previous application processes, possibly due to industry consolidation and the small number of mega-giants which now control the industry (Scientific Games, GTECH/IGT). To increase bidding this time, the UK Gambling Commission plans to a more diverse range of bidders, including firms from the “tech and finance industries”, according to the Financial Times.
If so, the UK Gambling Commission could be creating an entirely new major lottery operator out of whole cloth. If a tech company gains the revenues from a major lottery operation, it could compete for other licenses around the globe. At the same time, if a major financial institution gains the know-how and experience to organize lottery gaming, it could become a major new player in the industry.
Given that consideration, existing lottery operators might be motivated to bid high on the UK’s National Lottery, to assure a well-heeled new competitor does not enter the market. Such a process thus could elicit bigger bids from the established lotto organizers, even if they have a built-in advantage of trust and reliability in the eyes of the UK Gambling Commission.
Neil McArthur on Tech-Based Lottery Games
Speaking of the process in a process before the World Lottery Summit, Neil McArthur said the opening of bids was more about innovation instead of competition. The UK gaming chief said, “It is increasingly moving towards tech-based, media-based, personal device-based. We want to find out what’s interesting to finance providers and technology providers to get the broadest possible input.”
The UK National Lottery generates £3.3 billion a year in gross gambling yield for its organizer — the difference in the amount staked and the amount paid out to lotto bettors. That makes the National Lottery the 4th-largest lottery drawing in the world and one of the most lucrative and stable contracts the United Kingdom’s government hands out. It should draw interest from a wide variety of tech and financial companies — perhaps some working in tandem.
If Neil McArthur’s ploy works, one can expect in the coming months to hear about respected financial institutions make partnership deals with innovative tech companies. One would provide the capital and the other the technical expertise to make a compelling bid on the National Lottery.
UK Needs Innovative Lotto Organizer
The UK Gambling Commission’s director said the need to draw in other companies had to do with the evolving tech sector and adapting to a quickly-changing market. McArthur said, “The world’s a very different place, even during the life of this license.”
“Consumer behavior, technology, and communications have moved substantially. Technological innovations offer a lot of opportunities in that space, because you have a lot more information about your players. You can see what they’re doing and you can give them tools to help themselves manage their gambling.”
Camelot No More?
One additional reason for an open bidding process is discontent with the current provider, Camelot. Since the National Lottery was established in 1994, it has been organized by Camelot, a gaming provider owned by Canada’s Ontario Teachers’ Pension Plan. In recent times, Camelot’s tenure has been troubled.
In August, the Gambling Commission fined Camelot £1.15 million for a mobile app glitch and direct debit errors which harmed customers.
In 2015, Camelot received a £3 million fine for paying out a prize to someone holding an allegedly fraudulent ticket.
Camelot’s Increased Profits, Flat Charity Contributions
Perhaps more damning are the charges that Camelot has increased its profits at the expense of its contributions to good causes — one of the reasons the National Lottery Commission gave Camelot three National Lottery licenses in a row. Camelot’s profit after tax was £71 million in 2016-17, which represented a 122% rise in profits over the period of 2009-2010 (£39 million), when last its license was under review.
During the 2016-17 period, Camelot’s contributions to charitable causes rose just 2%, compared to the 122% in increased profits. Furthermore, the last two bidding processes were marred by charges of irregularities in the bidding process. During Camelot’s second bid, it lost to Sir Richard Branson’s bid, only to have the license awarded to Camelot after an appeal to the High Court.
In the third bidding process, Indian lottery operator Sugal & Damani, the only rival allowed to bid against Camelot, accused its rival of of under-performance and threats of legal action. According to S&D, Camelot used the threat of a similar lawsuit to win the lucrative license.
Neil McArthur on Camelot’s Performance
McArthur acknowledged the charges of under-performance, saying, “There have been some areas where their performance has not been what we would have expected. My concern is to run a competition that is scrupulously fair for all those involved.”
“One of the many lessons that could be learned from last time is that you want as many people that are credible and meet your expectations in the process as possible.”