Camelot Group plcNote A are the operators of the UK National Lottery. Camelot Group was awarded the National Lottery franchise in 1993[1] (though the lottery didn't start until 1994) and was re-awarded the franchise in 2001. Each franchise period runs for eight years with the next franchise starting in 2009. The Government body The National Lottery Commission is responsible for deciding who is awarded the franchise. The way the franchise was awarded to Camelot in 2001 caused some controversy due to the state owned Royal Mail which had a 20% stake in the Camelot Group.[2]
Formation
Camelot was formed as a consortium to bid for the National Lottery project. The major partners were ICL, supplying hardware, software, and systems integration expertise; Racal with responsibility for the communications network; and Cadbury Schweppes bringing experience in consumer marketing and knowledge of the world of corner-shop retailers. De La Rue brought knowledge of secure printing technology, and GTECH Corporation were brought in as the selected supplier of applications software.
Staff were originally seconded from the partner companies, only transferring to Camelot Group when the bid was successfully won.
Senior executives such as Tim Holley were enticed to join the project by the promise of large bonuses if the bid was successful. This caused embarrassment later when the incoming Labour government, in particular Chris Smith, the Culture Secretary, publicly criticised Camelot and its executives for excessive greed in the level of salaries and bonus payments.
2000/2001 Franchise Controversy
There were 2 companies competing for the National Lottery franchise in 2001, Camelot, the incumbent operator and a rival operator organised by Sir Richard Branson called The People's Lottery.
During the 2000 franchise bidding process, a technical problem with lottery terminals supplied by American company GTECH Corporation came to light. It was discovered that this technical problem may have inadvertently caused winners to be paid incorrect amounts and it was this problem and the relationship between Camelot and GTECH that saw the National Lottery Commission recommend the lottery franchise be awarded to The People's Lottery. GTECH originally were a shareholder in Camelot Group but they later sold their shareholding to Camelot Group with the remaining shareholders increasing their stakes from 16.66% to 20%.
In August 2000 the chair of the National Lottery Commission, Dame Helena Shovelton stunned both parties when she announced that neither party would be invited to run the National Lottery, claiming that neither party met the statutory requirements to run the lottery. It was felt legal problems were responsible for the downfall of The People's Lottery bid whilst the relationship between G-Tech and Camelot was the reason Camelot would not be invited to run the lottery. Despite the fact that neither bid met the statutory requirements, the Commission still tried to award the franchise to The People's Lottery.
By September 2000 it was clear that despite neither party meeting the statutory requirements to run the lottery, the Commission was going to award the franchise to The People's Lottery. It was at this point that Camelot initiated legal action, taking the Commission to the high court for a judicial review. The High Court judges sided with Camelot, describing the Commissions decision as "conspicuously unfair". The National Lottery Commission responded by dismissing the Treasury legal team who had been advising them. Dame Helena resigned shortly afterwards and was replaced by Lord Burns.
During November, the National Lottery Commission reopened the bidding process and both parties resubmitted their bids, the commission hoped to announce the winner by mid-December. On December 19, 2000 the commission announced that Camelot would be awarded the franchise, with voting 4-1 in favour of Camelot[3]. One member would later resign from the commission over the whole process, deeply unhappy that Camelot had been reawarded the franchise. It was during the second bidding process that Camelot agreed to buy out shareholder G-Tech's stake in the company. Sir Richard Branson threatened to take further legal action but faced with the prospect of a lengthy and costly legal battle, one which could have eventually resulted in The National Lottery games being suspended, he backed down.
2009 license
January 31 2009 saw the start of Camelot's third license period, increasing the money given to good causes, and increasing retailers' commission from 5% to 6%. The third license is for a ten year period with the option to extend by a further five years.
Camelot have cut costs by 25% seeing numerous redundancies throughout the company. 45 people at the Aintree Liverpool site have been affected. It was reported in a local newspaper that the members of staff didn't receive time to collect their belongings and were escorted from the site by security staff.
Shareholders
Following GTECH being bought out by Camelot in 2001, there are now 5 equal shareholders, all of whom have been shareholders in Camelot since the company was founded in 1993.
Income
For every pound spent on the National Lottery, it is split in the following:
- 50p → Prize Fund
- 28p → Good Causes
- 12p → Government
- 5p → Retailers as Commission
- 5p → Camelot
- 4.5p → Camelot for Operating Costs
- 0.5p → Camelot for Profit
References and Notes
- ^ International Herald Tribune
- ^ BBC News Online November 3, 2004
- ^ The lottery commission's statement
- Note A Although Camelot is a public limited company, its entire share issue is owned by 5 companies, as detailed above.
- Note B The National Lottery brand is owned by The National Lottery Commission and licenced to Camelot as part of the franchise agreements under which Camelot operate The National Lottery.
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