Camelot blames rise in marketing costs for 40 per cent fall in profits

National Lottery operator Camelot says a 40 per cent fall in profits for the first six months of this year is due mainly to a massive increase in marketing costs.

The National Lottery operator this week revealed sales fell nearly seven per cent to &£2.26bn over the period, but profits before tax collapsed 40 per cent to &£20.2m. Camelot says it is still on course to meet its increased target of raising &£10bn for good causes.

Marketing costs have soared by 61 per cent to &£39m over the half year as the operator launches new games in a bid to revive flagging interest in the Lottery, including Thunderball and the Big Draw 2000 New Year’s Eve game.

But Simon Burridge, a spokes-man for Richard Branson’s mooted rival bid to run the next lottery licence, says: “Camelot has under-marketed during the course of the licence, and now it has to increase marketing expenditure to address the resulting fall in sales. We are now beginning to see it hasn’t been as good a custodian of the Lottery as it has been making out.”

Dianne Thompson, Camelot’s commercial director, says: “The Lottery has been a lot more successful than anticipated, so there wasn’t the need for so much marketing. In this half-year, we have only had 14 weeks of Thunderball. Overall, we expect slow, steady growth.”

Camelot is preparing for the rebid for the Lottery, and is asking the National Lottery Commission to clarify how it will evaluate the bid. It also argues there will be considerable risks attached to running the next licence, as there will be increased competition from new media in the form of Internet gaming.