The prize payout shortfall

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Concern and some alarm has been raised by distribution boards about the possible loss of hundreds of millions of pounds because of the demise of ‘prize payout shortfall’ sums in the new licence. 

Under the first licence the NLDF gained £650m in windfall payments, thanks largely to the fact that predicting Lottery game sales is, for a first-time lottery operator, a very inexact science. Camelot’s target for awarding prize money was 50% of sales, averaged over the licence period. But some individual games (eg, instants) paid out more, and others – especially the main game – paid out less. So the average ended up being 47.8% and most of the other 2.2% was handed over to the NLDF.

 In the new licence, the concept of prize shortfall no longer exists in the same way. Camelot is likely – because it is more experienced now, and also to attract more players – to keep the prize payouts much closer to its target of 50%. And whatever the percentage on a specific game, once the players’ winnings, duty and fixed costs have been deducted, the rest goes straight into the good causes/Camelot pot. The bottom line? The NLDF will probably lose out marginally (see box above) but this will be because of higher prize payouts, and not because the new licence structure is cheating the distributors of any cash.