Licence Review: key points

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The consultation paper states upfront three key tenets setting the context for the review: 

• continued legal protection for the National Lottery as ‘the only large-scale lottery allowed in the UK and whose purpose is to provide income for good causes’
• the status of the operator as a commercial or not-for-profit set-up is not in itself important: ‘what matters is the outcome’
• the Government does not accept that ‘Lottery fatigue’ is inevitable.

The paper then sets out two categories of change aimed at strengthening competition in a future licensing round: firstly, measures that could be undertaken broadly within the existing legal and regulatory framework; and secondly, those requiring more radical overhaul.

Within the first category, which leaves intact the structure of a private licence-holder overseen by a government regulator, the cost, complexity and commitments required from consortium partners wishing to bid to run the Lottery is identified as barriers to competition. 

Ways of lowering the barriers might be:

• ‘state subsidy’ for potential fran chisees: applicants would make a short initial bid and those seriously in the running would then be asked to prepare a fuller bid which the regulator (the National Lottery Commission) would subsidise.
• less detailed information during the early stages.
• define the bidding framework, terms and requirements much more tightly
• award the licence for a longer period
• stagger the contract terms of key suppliers. 

It would be up to the regulator, nearer the time of the next licence competition, to decide which if any of the above options it wished to adopt. But will they solve the problem? More radical options, needing further legislative change, are then outlined:

• Separation of infrastructure and Lottery products: this option would involve two separate bidding competitions, one for an operator to run all the infrastructure and management of the Lottery, the other to design and run the games and marketing. More than one licence could be awarded to run games.
  
• NLC runs Lottery through the private sector: This would bring the Lottery’s structure more into line with most overseas lotteries, in which the regulator sub-contracts the infrastructure provision and then issues licences to private companies to run games, retaining ultimate responsibility for Lottery strategy and marketing.
  
• Maximum flexibility: new legislation would remove the current licensing requirements, leaving the NLC’s way clear to decide on the best structural solution in five or six years’ time.
  
• A National Lottery operating company: the operating company would stay the same, retaining the same staff and structure, but when a new private sector company won the licence, a new set of shareholders would take over the company and new top management would be installed to run it.