An Overview of the UK National Lottery Bil

9 December 2004

The U.K. National Lottery Bill, published Nov. 26 by the British Department for Culture, Media and Sport (DCMS), aims to improve how lottery funds are distributed to good causes as well as streamline administrative processes to save an estimated £6 million to £12 million per year.

"After the less-than-smooth award of the last license in 2001, serious questions were asked about how it could be handled better next time. . ."
-Tessa Jowell

One of the bill's main goals is to make the lottery more responsive to public priorities. To that end, the bill will merge three entities--the New Opportunities Fund, the Community Fund and the Millennium Commission--into a single distributor called the Big Lottery Fund. The DCMS estimates that the consolidation of funds will not only save money, but it will also make it easier for charitable groups to apply for and receive lottery money.

Also included in the bill are measures that would allow lottery distributors to receive and consider public consultation before deciding where to allocate lottery money.

"This could mean people getting involved via public opinion polls, citizens' juries, focus groups, Internet surveys, telephone, Internet or television voting for individual projects or by joining a local or regional awards panel," DCMS Secretary Tessa Jowell explained.

Months ago Jowell was seriously considering breaking the National Lottery license into three parts to cover the different products, but the DCMS finally settled on plans that would keep all products licensed under a single operator. An important change in the licensing structure, however, aims to improve the process by which operators compete for the license.

"After the less-than-smooth award of the last license in 2001," Jowell said, "serious questions were asked about how it could be handled better next time--in particular, how to ensure that a genuine market exists for the lottery license because the more efficient the market, the more funds for good causes."

The National Lottery Commission, the organization responsible for regulating the National Lottery and its operator, has already begun designing the rules for a two-stage license bidding competition. Over the next few months the commission will seek input on a number of potential improvements, including:

  • reducing the information required from bidders at early stages in the process;
  • obtaining clearer sales forecasts;
  • establishing more detailed bid requirements and the means of achieving them;
  • offering licenses of varying lengths, up to 15 years;
  • extending licenses to award exceptional performance; and
  • contributing commission funds to the bid costs.

The news that only one license will be determined by a process designed to encourage intense bidding has led to anticipation that some of Britain's big gambling companies, such as Rank and Ladbrokes, could be contemplating ways to enter the competition. The Observer quoted a Ladbrokes spokesperson as saying, "The government has made the possibility of Ladbrokes bidding likely. We have got more than enough expertise to bid. Gambling is what we do. When the National Lottery was first bid for in 1992 it was not considered gambling. Funny how that's changed."

Considering the outcome of 2001's bidding process (in which the current licensee, Camelot, was eliminated, allowed to re-enter the bidding and eventually awarded the license), the DCMS has also implemented a fallback approach to be relied upon in case the bidding competition is unsuccessful.

"Even though [a single license awarded by competition] is what we want to happen, we cannot absolutely guarantee it," Jowell said. "This is not a market like any other. So I have decided that in the extreme circumstances of an unsuccessful competition, unwelcome as that outcome would be, we must have a fallback."

The fallback plan would permit the National Lottery Commission to offer a small number of licenses to operate different parts of the lottery. Before the competition begins, the commission will define what it believes would constitute an unsuccessful competition.

Click here to view the U.K. National Lottery Bill.

Bradley Vallerius

Articles by Bradley P. Vallerius, JD manages For the Bettor Good, a comprehensive resource for information related to Internet gaming policy in the U.S. federal and state governments. For the Bettor Good provides official government documents, jurisdiction updates, policy analysis, and many other helpful research materials. Bradley has been researching and writing about the business and law of internet gaming since 2003. His work has covered all aspects of the industry, including technology, finance, advertising, taxation, poker, betting exchanges, and laws and regulations around the world.

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