From the proliferation of games, you might think the Lottery was flourishing. But it hasn't always been that way. Ian Walker suggests a simple ball transplant may help
The chance of winning was just one in 14 million. Yet despite the odds, the National Lottery's debut draw was a huge success. And this success continued over the following years, helped by an unusually high number of roll-overs and excited journalists, who searched out the winners to trumpet their joy to the rest of the dreaming nation. No one even seemed to care when Camelot gave itself handsome bonuses. We loved the Lottery.
But the Lottery alone was not enough. Three months later came Scratchcards, which quickly attracted 40 million players a week. But by 1999, sales had fallen to ten million a week, and only recently have they enjoyed a revival. Shortly after the Lottery's second birthday, the Wednesday draw was introduced. For a while, this boosted overall sales to more than £100m a week. But the magic soon began to wear off. Wednesday sales held up for a year or two, but when a roll-over famine hit, these, too, began to decline.
The Lottery was in trouble. The solution? Yet another game, the Saturday Thunderball, which offered better odds of intermediate prizes and a fixed top prize of £250,000. Support was wobbly at first, but soon stabilised at around five million people. A year and a half later, the Saturday and Wednesday "Extras" were invented. To play these, you had to buy a regular Lottery ticket as well. Not many people were willing to stake £2 on their dream, especially as there were no consolation prizes - if you failed to match all six balls, you went empty-handed. The Extra games rolled over again and again, and few people were interested in playing a game that no one ever seemed to win. The Extra flop was closely followed by the launch of the Wednesday Thunderball. Even though this regularly made sales of £2.5m, the Lottery continued to decline.
The diversification of games was a complicated, often confusing, response to falling sales. But the solution was simple. The problem was that the designs of the Wednesday and Saturday games were not right for their respective market size. Wednesday was too hard to win and the roll-overs were so small that Saturday players hardly noticed. The Saturday game was too easy, which meant that Wednesday suffered from roll-over droughts. The two games needed separating. A ball transplant would also have helped. Wednesday needed to lose a ball or two to make it easier to win; Saturday needed to gain a ball or two to make it harder to win and to generate some big roll-overs to lure the punters back.
But Camelot was worried that after such radical surgery the public would love the Lottery less. Instead, the operator reached for the medicine it knew best - diversification - and yet more games were introduced: Daily Play, HotPicks, EuroMillions, and the very latest online and mobile phone games. Around 1.5 million EuroMillions tickets are sold in the UK, but sales in Spain and France are collectively nine times higher. Daily Play sales, which began close to £2.5m a week, have fallen steadily to around £1m; HotPicks sales have also seriously dropped in its three-year history. It is too early to tell what long-term impact the online and phone games will have.
Camelot has run all these games efficiently, with only occasional and usually minor glitches. But if Camelot is unopposed when the licence to run the Lottery is again up for renewal, it will be a reflection of how the operator has done a good job in return for not very much. After ten years, it is clear that a national lottery does not necessarily offer easy pickings, and that you have to work hard, even take risks, to stay ahead. Camelot has suffered from playing safe, content to allow the market size to match the game design instead of changing the game design to expand the market.
Across the whole portfolio of games, sales are around £90m per week, not far off the peak of £100m seven years ago - and nearly double the £48m a week when the Lottery first began. But if you take inflation into account, what seems a modest decline of 10 per cent is in fact a real decline of around 30 per cent. So why not raise the ticket prices? The trouble is that sales depend partly on the ease of purchase: thus a price of £1, which minimises fumbling for change, has a strong appeal. The somewhat awkward price of a EuroMillions ticket in the UK (£1.50) might help explain its lack of appeal here compared to France or Spain (where tickets cost two euros).
The Department for Culture and the good causes can only suffer "money illusion" for so long. The real slide in sales will eventually sink in. Camelot needs to start thinking more inventively about how to rekindle our love for the Lottery.
Ian Walker is professor of economics at the University of Warwick
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