11 minute read
Lottery
from SBC Leaders Issue 19
by SBC Global
UK NATIONAL LOTTERY: A NEW ERA?
AS WE EDGE CLOSER
to finding out the results of the Fourth National Lottery Licence competition, we assess the hopefuls’ chances and the challenges they face in the meantime
BY CHARLIE HORNER
In October last year, the UK Gambling Commission confirmed that it had received four bids in the Fourth National Lottery licence competition, the most since its inception in 1994. So now the race is on with all four competitors vying for that 10-year contract.
Camelot, the ever-present incumbent, is under fierce pressure to win another term, with the Czech Republic’s Allwyn, Italy’s Sisal and Richard Desmond’s Northern & Shell all taking a shot at becoming the National Lottery operator. Could this be the year that Camelot is dethroned?
We’re now at the stage where the applications are being evaluated, with each applicant expected to provide a presentation to the UK Gambling Commision (UKGC) in the coming weeks and months. With the evaluation process supported by the Commission’s lead advisory group, Rothschild & Co, licensee hopefuls have a tough road ahead of them.
The process is shrouded under strict secrecy, with little being leaked into the public sphere. A decision was expected in ‘early 2022’, with reports stating that the winner might have been announced as early as February. And in the event that Camelot is defeated, the licence will be subject to a two-year handover period.
Intriguing times lie ahead in the UK lottery space with Camelot battling criticism from MPs and campaigners questioning its priorities in recent months.
Allwyn has set out its stall to become a global lottery brand, ferociously targeting the UK and US markets in a strategy that has included a fresh re-brand and enlisting the help of some of the UK’s most influential figures in sport, charity and business.
LICENSEE HOPEFULS HAVE A TOUGH ROAD AHEAD OF THEM
Lord Sebastian Coe, Allwyn Board of Directors
Camelot criticism
Undoubtedly, the key factor at play in the process is which operator can help maximise contributions to good causes, as set out in the National Lottery’s mandate.
Numerous community, cultural and sporting organisations currently rely on lottery funding to continue operating - many of which were hit hard by the global pandemic. So eyes are eagerly watching events unfold, with Camelot coming under significant scrutiny for its recent good cause contribution record.
Carolyn Harris, Labour MP and Chair of an all-party parliamentary group for gambling-related harms, has urged Camelot to remove any National Lottery branding from its portfolio of online instant games.
Concerns have been raised over whether Camelot’s instant games have contributed smaller percentages to good causes to attract more players through higher jackpots.
The operator’s figures detail that 31% of the income from draw-based games fund charitable and societal causes, compared with about 9% from scratchcards and 12% from instant win games.
Harris told The Observer: “The National Lottery is now unrecognisable from when it was launched. It is not acceptable that they are using what people trust as a brand for good causes to encourage people to gamble. It’s appalling.”
The former Leader of the Conservative Party, Sir Iain Duncan Smith, who acts as the Vice-Chair of the all-party parliamentary group, added: “There should be a fixed percentage on the amount that goes to good causes. The operator is beginning to look like any other gambling company.”
Attempting to understand the impact of National Lottery funding on those who it helps most, the Department for Culture, Media and Sport quizzed three athletes as part of the evaluation process of the competition.
In a discussion entitled ‘What next for the National Lottery?’, the threetime Olympic gold medallist swimmer Adam Peaty responded to claims from MPs that the operator’s profits have soared much higher than its contributions to good causes since 2010.
“It’s hard because it’s gambling. Are
THE KEY FACTOR IS WHICH OPERATOR CAN HELP MAXIMISE CONTRIBUTIONS TO GOOD CAUSES THE NATIONAL LOTTERY IS NOW UNRECOGNISABLE FROM WHEN IT WAS LAUNCHED
we funded to make them look good?” Peaty posited.
“I think if we’re doing that, then there should be more funding. If your profits are going up by 120% and good causes are only going up by 2%, then it doesn’t take anyone with two brain cells to go ‘hold on a minute, what’s going on here?’”
Camelot’s position as a 28-year incumbent of the National Lottery licence has led to questions of complacency, given the lack of true competition throughout its tenure.
However, as the increased rival bids pile on the pressure, questions marks are being raised over whether the company is now an antithesis of the lottery’s mandate, prioritising profit over charitable and societal benefits.
Waiting in the wings, three other operators believe they can provide a fresh perspective for the National Lottery, steering its focus back towards providing for good causes.
Allwyn on the charge
In the Czech Republic, Allwyn has been preparing to evolve into a global lottery brand, building upon its success in Europe. Namely, the firm - formerly known as Sazka Entertainment - announced a rebrand in December of last year.
It stated that its rebrand reflected the group’s “effort to reposition as a global business”, as a result of the recent transformation of its operations and enlargement of its business through strategic M&As.
Having previously established Allwyn as a UK-based subsidiary in 2020 to battle for the National Lottery licence, the commitment to a rebrand is indicative of a company with confidence in the UK brand.
Going from strength to strength, the firm recently unveiled its intentions to become publicly listed on the New York Stock Exchange in a transaction worth around $9.3bn, 11.5x higher than its most recent EBITDA.
Partnering with the NYSE-listed Cohn Robbins Holding Corp, Allwyn expects the listing to expand its reach into the ‘highly attractive’ US lottery market and drive its organic and inorganic growth metrics.
Sir Keith Mills, Allwyn UK’s Chairman and the man charged with leading the firm’s bid in the competition, commented: “It’s exciting to see our parent company’s appetite for growth and the desire to bring lottery expertise to new corners of the world. And whilst we have already submitted our bid for the Fourth National Lottery Licence, this partnership only makes our proposition stronger.”
Aiming to adapt to the UK’s culture and strengthen its hand in the competition, Allwyn appointed Lord Sebastian Coe to its board of directors.
Lord Coe is the current President of World Athletics and was instrumental in London’s bid to host the 2012 Olympic Games. He is seen as key to Allwyn’s efforts in the National Lottery licence competition.
Karel Komarek, the group’s Chairman, explained: “We’re honoured to have him join our team as its first Independent Non-Executive Director. He brings tremendous additional strength to our international perspective as we strive to maximise the raising of funds for good causes in all of the markets we serve.”
Allwyn’s efforts to reposition itself as a global brand, twinned with its tailormade approach to the UK market, signals that it is modestly optimistic about its chances of success.
Yet, with two other competitors also in the mix and Camelot’s long association with the lottery, nothing is set in stone until the UKGC announces its decision.
Whether or not Camelot has enough goodwill in the bank to shake off recent criticisms remains to be seen, but its position as the dominant figure in the UK lottery market ensures that it will be considered the frontrunner for a fourth consecutive term. •
Carolyn Harris, Labour MP for Swansea East
Sir Iain Duncan Smith, Conservative MP for Chingford and Woodford Green
12-14 April 2022 ExCeL London, UK
Together never felt so good
NIELS ONKENHOUT: TAKING A UNIFORM APPROACH TO PLAYER PROTECTION
THE CEO OF NEDERLANDSE LOTERIJ discusses the growing potential of the Dutch online gambling market and the questions the country faces when it comes to player protection and advertising
BY ERIN GALLAGHER
Launching an online gambling market comes with its own set of challenges as the Dutch found out in October 2021. Almost six months later, questions are still looming over the regulator’s head.
Making an appearance in the SBC Leaders Podcast, Onkenhout shared the view that safer gambling has been a key challenge which requires companies to first define what a ‘problem player’ is. But despite this, player protection has remained at the front and centre of everything Nederlandse Loterij does.
“There are a number of challenges, particularly in the online gaming market,” he said. “One of the things which I found challenging is making that step from saying we are protecting consumers to actually making sure that is demonstrated in every action we take.
“There are some companies who believe that when you're in the online space, a problem player is somebody who calls to tell you that they have a problem. Then in their statement of purpose they make it known that they don’t want to make any money from problem gamblers.
“Of course, that is an easy way. But a lot of people understand that if you’re a problem gambler, the likelihood of you making that call is very slim. So
we need to have a uniform definition of what constitutes a problem gambler so that we can really address those problems.”
There is also a need to address older players instead of just focusing primarily on protection of young gamblers, he told SBC Leaders, whilst he also acknowledged that some players have multiple accounts which makes deposit limits somewhat ineffective.
Onkenhout maintained, however, that the country still poses a lucrative opportunity for any interested companies. He drew particular attention to blockchain technology which he believes offers betting companies the opportunity to link data with regards to player protection.
“Every company has a deposit limit in place,” he continued. “But if somebody has six accounts, that's six times a day that a person can deposit funds into their account.
“Shouldn't we have some kind of blockchain technology where we link all that data? That could then mean that if someone has deposited a certain amount at Nederlandse Loterij that day, they cannot then make a deposit at another company because the technology will prohibit it.
“Those are things that I would really be proud of if I could have an impact, and I think that the industry itself should proactively make that happen as opposed to waiting until the regulator or politicians, usually not based on facts, make decisions that are adverse.”
The implementation of the KOA Act
licensing regime on 1 October brought in a whole host of changes to the Dutch gambling space, affecting both licensing and advertising.
As a result, companies active in the Netherlands before the new regulatory regime was introduced were asked to reapply for their licence under the terms of the KOA Act.
Onkenhout explained: “When these operators came back into the market, 5% of their customers went into even worse areas, into illegal areas. The other 95% ended up with the 10 operators who got a licence, of which Nederlandse Loterij is one.”
Unlike the other licence holders, Nederlandse Loterij has a strong home advantage with 295 years under its belt - making the company the oldest state lottery in the world. The state lottery also operates a sports betting division, TOTO, which offers pre-match and live wagering and casino games.
Onkenhout continued: “This means we are very well plugged into Dutch society. You can understand what emotions are and how different stakeholders act and what their beliefs are and how you can anticipate.
“At Nederlandse Loterij, we have
three shareholders: the Dutch state, the Dutch National Olympic Committee and a group of 18 good causes. But I think that the fact that we are a majority state-owned company helps us to gain a better understanding of what happens in the political arena.”
Onkenhout highlighted how the debate over further KOA reforms
THERE IS A PANIC AMONGST POLITICIANS AND REGULATORS ON THE SHEER LEVEL OF ADVERTISING, AND WHETHER WE ARE LEADING YOUNG PEOPLE INTO THE ABYSS
continues to divide MPs’ opinions. Reflecting on the developments of a frantic five months since KOA’s formal launch, he remarked: “After five months, there is now a debate on an advertising ban, in which a new parliament has called ministers oneby-one to be questioned on how all this has come about.”
Observing that the Netherlands
is a similar size as the state of New Jersey, Onkenhout predicted that
the industry will become increasingly competitive as more operators enter the market.
“This means a country the size of New Jersey will have 20 licensed operators offering online gambling… that is an interesting proposition with a positive impact for all companies,” he remarked.
“It is incredibly well built from a regulatory point of view, but with an enormous amount of rules and regulations drawn from all the experience from other countries; whether it’s the UK or Scandinavia, which is often a role model for Holland.” •
