Select Committee on Culture, Media and Sport Appendices to the Minutes of Evidence


APPENDIX 3

Memorandum submitted by Mr Abdulla J Dharamsey

SELECTION OF THE LOTTERY OPERATOR FROM 1 OCTOBER 2001

  1.  The recent Judicial Review ordering the National Lottery Commission (Mr Justice Richards' Order of 21 September 2000) to include Camelot Group the incumbent Lottery Operator prior to deciding whether it or the "preferred bidder" The People's Lottery which has allegedly guaranteed to raise £15 billion (50 per cent more than Camelot) for the so called good causes, should be the next National Lottery Operator has totally undermined the credibility of NLC. As the Select Committee must be aware, the Commission was established just over 18 months ago to replace OFLOT—The Office of The National Lottery that was responsible for granting the original licence to Camelot in May 1994 after appraisal of bids from eight different parties. As someone who was retained as a Consultant Advisor to one of the bidders in 1994 and actively involved in putting together the Third Bid prior to our decision to withdraw (see letter to NLC of 28 February 2000)[24], we feel the Commission had already contravened section 5(3) of The National Lottery, etc Act 1993 (as amended by The National Lottery Act 1998) and altered its own guidelines and terms of reference (see News Release dual dated 24 June-21 September 2000).* With time being of the essence and to avoid further litigation, we recommend that BOTH bidders should be granted a seven-year licence with a review after three or four years ie by September 2004-05 to enable either Operator to exercise a break clause to terminate its Licence. As the Select Committee is aware, an amendment to the relevant legislation will be required to accommodate this scenario and relevant connected matters like names to be used by the Operators (say Camelot and People's Lotteries respectively), etc. Both Licensees should be required to install new machines by 30 September 2001.

  2.  Relevant correspondence between Trigger 7 Lotto and NLC from 29 December 1999 and various attached documents* dated thereafter should be read in conjunction with this memorandum, to enable the Select Committee to understand how our realistic bid details carried by The Financial Times on 19 February 2000—ten days before the official deadline were formulated. Apart from the named personnel (see News Release dated 21 February 2000)[25] and several market researchers, our prospective consortium sought the assistance of just two renowned academic scholars from leading UK universities. The total cost of the bid proposal of £598,500 was underwritten by the sponsoring bank which is currently backing our e-commerce organisation EZEELOTTO.COM, probably the largest on-line football lotto which published its web site on 16 August 2000. As at 30 September 2000, it had been "viewed" by over 800,000 people on the Internet!

METHODS OF SALE OF LOTTERY TICKETS

  1.  The Lottery tickets and Instants' cards could continue to be sold as at present except that "Group Play" should be encouraged for the on-line game. There could also be officially endorsed agents who would target British Expatriates and British bank account holders living abroad to participate. The UK 649ers Lottery Club (previously 649 Club Fortune set up by me in April 1995 just five months after the Lottery was launched) now owned by another and based on Mainland Europe has over 350,000 members who on average spend £2 per draw equivalent to around £700,000 per draw for 104 draws every year!



THE STRUCTURE OF LOTTERY PRIZES

  1.  If there are to be TWO Operators, the competition to generate more would be there and the NLC could be charged with a duty to monitor the lotteries according to the obligations and expectations upon the Licensees as set out in the "Invitation to Apply" document issued previously by the Commission.

THE ROLE OF THE NATIONAL LOTTERY COMMISSION

  1.  In view of the incompetence, indecisive, incurious, incredulous, inconsiderate, controversial and prejudicial decision-making by the present NLC which eventually led to a successful legal challenge by the aggrieved Lottery Operator, the Cultural Secretary could be advised to alter the make-up of the Commission pursuant to granting of the Licenses to the Operators to retain confidence in the licensing and regulatory body. There is no need to have another QUANGO to oversee the Lottery.

ENFORCEMENT OF THE AGE LIMIT FOR PURCHASE OF LOTTERY TICKETS

  1.  During the 19 separate detailed market surveys carried out by us prior to the 29 February deadline for the Lottery bids, this problem was found to be prevalent in respect of sale of Instants' cards rather than the on-line Lottery tickets. Presumably the number of checks that the Lottery Retailers are subjected to could be slightly increased. Most 15-16 year olds carry a different form of photo card from those under 15 and this could be demanded as ID prior to selling Lottery tickets and Instants cards to them.

THE PROMOTION AND PUBLIC IMAGE OF THE NATIONAL LOTTERY

  1.  In our considerate opinion, the promotion of the Lottery within the UK is quite satisfactory. As we mentioned in our News Release of 21 January 2000, there was bound to be a PF factor (Participation Fatigue) that would "set in" some time. Recent review of the turnover indicates an upward trend as greed begins to take over. However, the public image of the National Lottery is a separate issue which requires an in depth analysis which my expertise does not enable me to comment upon or give a justifiable opinion.

THE IMPACT OF TNL UPON CHARITIES AND CHARITY GIVING

  1.  There is bound to be a deluge of comments and arguments in respect of this matter from qualified and seasoned professionals from large charitable and voluntary organisations for the Select Committee to ponder and discuss. If there is any sympathy, it must be for the very small single-issue charities that lack the personnel to market and promote their objectives to a wider audience.

THE IMPACT OF TNL UPON THE BETTING AND GAMING INDUSTRY

  1.  As someone who has been involved in innovating betting and lotteries for nearly 10 years, I have noticed that the lobby for the gambling industry is active, persistent and powerful. Most of the largest bookmakers have already set up offshore betting offices which attract the lucrative non-European clientele. The Home Office has been issuing gaming licenses like confetti and the casinos are flourishing if audited accounts of some of the relevant companies are anything to go by. The Football Pools promoters have suffered the most but at their own peril for failing to improvise prior to the launch of the Lottery. Recent take-over of Littlewoods and Zetters by entrepreneurs seems to have instilled confidence back into the industry although only 20 per cent of the numbers who actively "played and invested" in the Pools over six years ago still do. The jackpot has dropped from around £2.2 million to about £500,000 despite increase in the stake monies. Also, due to no royalty agreements in force between Camelot and the Pools promoters or the popular newspapers, the latter have been using the Lottery numbers to enhance their turnover (Littlewoods and Vernons) and newspaper sales (The Sun in particular) to the eventual detriment of the former. We had previously raised this point in relation to the newspapers with Camelot in 1996 to no avail as the Lottery Operator was doing very well at the time after introducing the Midweek Draw!

THE TAXATION OF THE NATIONAL LOTTERY

  1.  The present level of Lottery Duty is not excessive in comparison to other privately operated National Lotteries in the Western World. Perhaps, the Government could be asked to consider reducing this to ten per cent and seek a reciprocal 2 to 3 per cent increase in contribution to the National Lottery Distribution Fund—an indirect gesture of goodwill towards the good causes by the Treasury.

THE OPERATION OF THE NATIONAL LOTTERY DISTRIBUTION FUND

  1.  The NLDF should be required to distribute the regular payments by the Lottery within a specified period of time to enable the various good causes to accrue interest on their share of the Lottery monies. This exercise would enable more projects to be considered for grants rather than the good causes hierarchy having to make contingency decisions. The overall loss of interest to NLDF would be insignificant. The good causes should also be allowed to invest their treasure troughs in short-term Government backed securities.

  2.  The present practice of unclaimed winnings being transferred to NLDF after 180 days of the Draw should be extended to 365 days as in most countries. In principle, these monies technically "belong" to the Lottery winners and a year is a reasonable time frame to enable a winner to make a claim. Furthermore, the Lottery Operator must be required to pay back any interest earned on those unclaimed winnings along with interest accrued on the weekly direct debits it requires the Lottery Retailers to transfer to its designated account(s).

GOOD CAUSES AND THE NATIONAL LOTTERY

  1.  There are no valid suggestions we intend to make on this issue as any arguments or comments pertaining to which existing statutory good causes should get what and whether new causes to benefit from the National Lottery via NLDF should be introduced, etc is a matter for the Government and those representing the various benefiting causes.

October 2000


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