Lottery Commission to cut back operator profits

Lottery regulator the National Lottery Commission has announced a crackdown on excessive profiteering and “fat cat” pay for the operator of the next Lottery licence.

The watchdog last week published the guidelines for the bidding process – the Draft Invitation to Apply – as the task of finding the operator of the licence, which begins in October 2001, gathers pace. The name of the winning consortium will be announced in June next year, with the competing consortia named at the end of February.

The guidelines will force all bidders to be “transparent” about the level of executive remuneration. This follows the “fat cats” outrage sparked by revelations in Marketing Week that directors of operator Camelot, including chief executive officer Tim Holley, chairman Sir George Russell and communications chief David Rigg, were receiving pay increases of 40 per cent as performance bonuses kicked in (MW May 29 1997), while sales dropped.

A Camelot spokesman says the company is still studying the implications of the guidelines, but adds: “Remuneration is an area we are looking at.”

The commission has also ruled that the operator of the next licence should take a smaller profit margin, as the risks are lower than with the current licence, since the system is established and now known to work.

The successful bidder will also be expected to contribute any “excess” profits to the National Lottery Distribution Fund, to be distributed among six good causes. The operator’s returns are likely to be linked directly to the amount raised for good causes rather than to sales of Lottery tickets.

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