Virgin narrows Lottery bid odds

Back in October, when it emerged that Richard Branson was likely to be not only in competition, but the only competition, to Camelot’s tenure of the National Lottery, his chances of success looked pretty slim.

Since then, two events have occurred which have made the decision next June as to who runs the Lottery from 2001 much less of a foregone conclusion. The first was the Lottery Commissioners insistence on £100m-worth of new Lottery apparatus being installed in retail outlets. The second, Camelot’s dismal set of first-half figures, which revealed a 40 per cent plunge in profits compared with the same period last year.

Clearly the £100m surcharge is a handicap only to the incumbent. Never mind that – if Camelot pulls through – the £100m will have to be deducted from overheads – and funded by future lottery ticket sales. That is the price to be paid for establishing competition and, indeed, satisfying Richard Branson’s vanity.

More subtle, but no less significant, is the likely impact of those first-half figures. The sharp downturn in performance could not have come at a better calculated time – in true Camelot PR tradition – for influencing the Commissioners against its submission. The impression they convey is of a company complacently drifting out of ideas after a long and remunerative term. Camelot can fairly object that it had always foreseen a downturn in its returns as the Lottery moved through its natural marketing cycle. But that’s simply not good enough. What these figures highlight is a fallow period of product development, especially in scratchcards. We have yet to assess the results of Thunderball and Big Draw 2000. Will they be known to the Commissioners, it’s worth asking, by the time a decision has to be made?

This, of course, is scarcely tantamount to saying Branson will win. True, the non-profit making formula has now been given more definition, and with it, credibility. It turns out to be a non-profit taking private company, rather than a charity, which will equip its executives with incentives, though not in the “fat cat” stratosphere of Camelot’s. This seems a sensible and workable proposal.

Less convincing so far is Branson’s line-up of “best practice” suppliers. Camelot still holds an excellent trump card in the form of the Post Office, while Branson’s project barely acknowledges the importance of a retail partnership. Selling in, it transpires, will be performed by a field force from CPM.

In any case, the incumbent tends to have the tactical advantage in competitions of this kind. If for no other reason than that it is tried and tested. Branson’s People’s Lottery, on the other hand, would take an unknown period of time to get into its stride.

The odds remain narrowly in Camelot’s favour – for now.