Camelot’s £1.5bn Olympic gamble

Athletes may not have begun training for the 2012 Olympics yet, but for National Lottery operator Camelot the race is already on. It has to take at least &£2.65bn in additional sales over the next seven years – the equivalent of &£7.2m a week, or &£379m a year – if it is to hit fundraising targets for the staging of the London games.

On Thursday last week Camelot launched the first of its Olympic-themed games – the Going For Gold scratchcard – which offers a top prize of &£2,012. But it appears to be a slow start. Not all retailers had received the cards as Marketing Week went to press and some report muted interest from the public.

It is the first time a lottery game has had a dedicated cause attached to it. For every scratchcard sold, the 28p normally assigned as standard to good causes will go towards funding the Olympics.

The launch coincides with the Government’s National Lottery Bill’s passing through Parliament. The Bill is designed to give players more of a say on where lottery money is spent, although the Department for Culture, Media and Sport (DCMS) says it does not have further plans for specific causes to be attached to different lottery games.

In total Camelot is expected to contribute &£1.5bn towards the cost of staging the London games in 2012. Half is scheduled to come from games exclusively dedicated to the Olympics. It will need to generate an extra &£2.65bn-worth of sales over the next seven years to raise that &£750m, while maintaining current levels of funding to good causes.

It is a hard task given that Camelot faced six years of declining sales until last year, when it secured a one per cent rise to &£4.61bn for the year to March 31, 2004 (MW April 29, 2004). Earlier this year Camelot’s sales rose for a second consecutive year to &£4.8bn.

“It is a stretching target but it is one that we are absolutely sure we will be able to meet,” admits a Camelot spokesman. Camelot hopes to offer draw-based games and one-off games based around events such as the Beijing Olympics in 2008. It is looking at Olympic-themed television shows.

Of the second &£750m, &£340m will come from the Sports Lottery Fund (the pot into which 16.6 per cent of money for good causes goes) and up to &£410m from mainstream National Lottery games. If Camelot fails to raise &£750m from Olympic-themed games, any balance will be made up from the mainstream National Lottery games. Likewise, if there is a surplus of money raised through the dedicated games, this will be used to offset money coming from the other games.

Charity groups are concerned that they might lose out on funding as money is diverted to the Olympic effort. The chief executive of the National Council for Voluntary Organisations, Stuart Etherington, has called for other causes’ funding to be protected. However a DCMS spokesman says: “There will be diversions of income from existing good causes but we would argue the Olympics will bring such greatbenefits that it is worth it.”

Camelot and the DCMS also believe that the lottery itself will benefit from an association with the Olympics. “Overall the Olympic project will have a halo effect on the lottery,” says a Camelot spokesman.

Part-way through its Olympic fundraising marathon, Camelot will face the hurdle of a licence review in 2009. And if it is on track and hitting targets, you can be sure the Olympic pot of gold will become a factor in determining the regulator’s decision.

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