Lottery sales fall as hype wears thin

HIGH STREET gamblers have been hit by "lottery fatigue" for the first time, according to figures released by Camelot, the National Lottery operator.

The company's profits slumped by almost one-fifth as the novelty of becoming a millionaire overnight - or not, as the vast majority of players have come to learn - finally began to wear off.

Sales of lottery tickets fell by 5.6 per cent, from pounds 5.5bn in 1997-98 to pounds 5.2bn in 1998-99 - but this was not cause for concern at Camelot Group's headquarters. Research in America had shown executives that ticket sales were likely to drop as the novelty of the games wore off. The only surprise was that interest had not fallen sooner.

Pre-tax profits fell from pounds 86.5m to pounds 70.1m, leading to a drop in the amount given to good causes, from pounds 1.57bn to pounds 1.49bn. In spite of the figures, company sources said that they expected to be among the bidders when the lottery licence came up for renewal in 2001.

As a result of the poor sales, the percentage of earnings given to good causes increased proportionately to 28.6 per cent, the highest since the lottery was launched in 1994. Camelot says that it is on target to donate pounds 10bn to good causes by the time its licence expires in September 2001 - pounds 1bn more than its original target.

"Lotteries in America experienced a fall-off in sales in years five to six as the excitement died away," said a Camelot spokesman. "In New York sales fell by 3.9 per cent, in Florida they were down 14 per cent and in California sales fell by 41 per cent."

Research has also shown an uncannily close relationship between the increases and decreases of a country's gross domestic product (the total value of goods and services produced) and sales of lottery tickets. During the period in question, Camelot's sales reflected a fall in the UK's GDP.

The group of companies that owns Camelot - Cadbury Schweppes, De La Rue, Racal Electronics and ICL - hopes to launch a successful bid against the Government's preferred "not for profit" option when the bidding process for the new licence begins next year. In spite of bad publicity over claims that Guy Snowden, the founder of GTech, an original Camelot partner, tried to bribe Richard Branson to keep Virgin out of the race for the first licence, the company has improved its profile and is regarded as one of the most efficient and successful in the world.

Camelot's other low point came because of public outrage over boardroom pay. Although still high by the standards of nearly all working people, boardroom increases appear to have been pegged.

Total pay for the Camelot board was pounds 1.52 million, compared with pounds 2.08 million last year. The highest-paid director, chief executive Tim Holley, received pounds 482,000, down from pounds 636,000.

To revive sales, the company is introducing "Thunderball", a pounds 250,000 top prize lottery, on Fridays to arouse fresh interest and boost prize money. "There have been challenging trading conditions and we are not immune from what's been happening on the high streets," said Peter Murphy, Camelot's finance director.