The encyclopedia · Strategy & Leadership · Strategic decision · 1993–2007
Britain tendered its lottery monopoly and earmarked 28% for good causes
After the 1993 Lottery Act, Britain awarded its lottery by open competition; Camelot won a 7-year licence and 28% of sales funded good causes.
Camelot Group · OFLOT (Office of the National Lottery)
the move
Parliament created the National Lottery in October 1993 and set up a regulator to run the tender. Eight consortia bid for the seven-year licence; on 25 May 1994 OFLOT chose Camelot, which beat Richard Branson's UK Lottery Foundation.
The licence fixed the money flows: 50% of sales to prizes, 12% to tax, 28% to five good causes — arts, sport, charities, heritage and the millennium fund — with the rest to the operator and retailers. Camelot projected £32 billion of turnover over the term.
The first draw in November 1994 drew 22 million viewers; the design converted a gambling monopoly into a predictable stream of public funding, and the fixed share insulated the good causes from the operator's fortunes.
why it works
- Competitive tender selected the strongest operator instead of gifting the monopoly.
- The legislated 28% share made public funding structural, not voluntary.
- A regulator with a duty to maximize returns to good causes checked the operator.
- Seven-year re-tenders forced the incumbent to keep competing to stay.
what transfers
Monopolies do not have to be gifts: license one under competition, fix the public's share in law, and make renewal a contest — the incumbent's margin stays honest.
what came after
Camelot kept the licence through the 2000 and 2007 re-tenders against challengers including Branson's People's Lottery; by 2008 the good causes had received more than £11 billion.
references
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