Where is Camelot’s knight?

The UK National Lottery is now the world’s biggest lottery in terms of gross revenue, with an annual turnover of more than 5bn. It has continued overall growth – weekly National Lottery sales are now over 100m, compared with 52m during its initial launch phase in 1994.

But not everything is rosy in Camelot, according to market research company Mintel. In its survey, The National Lottery and its retail implications, Mintel says the company needs to act now to rekindle lottery fever among the UK’s more affluent consumers if it is to meet its commitment to deliver 10bn to good causes by the time its licence runs out in November 2001.

Sales of the main online lottery Saturday game peaked in 1996 at 3.8bn, but had fallen to 3.1bn by last year. Although the launch of the Wednesday game in 1997 pushed total online game takings to 4.6bn for that year, in 1998 total takings were static or slightly down.

Mintel suggests that Camelot must maintain 100m a week average sales through the remaining period of its licence if it is to fulfil its 10bn commitment to charity. This is based on the company achieving total sales of 15.2bn in the last 152 weeks of its licence, which would translate to a further 4.25bn for good causes at the current 28 per cent ratio. However, there is a general downward trend in lottery playing, according to Mintel.

Neil Mason, a retail analyst with Mintel, says: “In the past year, there has been a definite fall-off in ticket sales for the online game, particularly among better-off consumers. Camelot needs to stimulate playing in this group, perhaps by offering better odds on some instant games or by introducing new games.”

Mintel points out that Camelot cannot simply try to get hardcore lottery players to spend more, because such players tend to come from the less affluent sectors of society and Government and lobby groups are already concerned about excessive levels of lottery playing among low-income consumers. So, the company must target peripheral players and non-players, who are more likely to be in affluent sub-groups of the UK population, if sales are to hit the necessary levels.

Mintel adds that with sales of both online and instant win games beginning to show signs of decline, Camelot’s marketers need to match their ability to sell new games to the retail trade with their ability to market them to consumers. While the company has done very well at the former, it has been less successful at the latter, as the problems with TV Dreams and Vernons EasyPlay have shown (although responsibility for marketing the latter rests with Vernons).

Mintel found there was a clear weakening of demand for instant win scratchcard tickets last year, amounting to an 11 per cent fall in sales. Even so, scratchcards still raked in 708m in sales, making it an extremely valuable impulse brand. Scratchcards have a very strong bias towards younger players, which Mintel suggests could be due to the shorter attention span needed, while the instant gratification offered seems to be more attractive to the less affluent.

Average lottery sales per terminal have fallen, from about 3,500 a week in 1995 to nearly 2,700 last year. The biggest factor in this fall has been the expansion of the retail network – in 1995, there were 18,500 outlets selling lottery tickets, while today 25,000 retailers have the online game and a further 11,300 outlets sell instant win games.

Kiosks are the most successful type of outlet for selling lottery tickets, taking nearly 7,800 a week on the online game. Supermarkets take about 5,200 a week and CTNs 3,000.

Sales of the Vernons EasyPlay game are excluded from the sales data on the tables shown here. Camelot acts as an agent for Vernons, taking responsibility for selling the game to retailers, while Vernons markets and promotes the game to players.

Mintel observes that Oflot was “persuaded that the new game would provide up to 200m in additional benefit to the good causes”. However, to do this, it will need to sell about 4.5m worth of tickets a week. In fact, the game sold 1.5m in the first week, peaked at 1.7m in the second and fell to just 340,000 for the last game of 1998.

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