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A daily podcast delving into the biggest stories of the day throughout the sports betting and igaming sector.
Fernando Noodt (00:03.278)
The UK's National Audit Office has launched a study into the country's fourth national lottery license. Despite some media coverage portraying it as an investigation into the current license operator Owen UK, a second glance shows that the official scope seems to be narrower. Timing is sensitive. Timing is sensitive. Lottery contributions to good causes have been under pressure, according to recent government figures.
And Owen itself has faced some scrutiny over how its performance measures against the commitments made prior to securing the license in 2024. So today we look at what the NAO study actually covers, how it differs from what is being framed in the media, and we crunch the numbers of the lottery's performance under Owen to date. Welcome to iGaming Daily, brought to you by Optimov, the creator of positionless marketing and number one player engagement solution for iGaming and sports betting operators.
I'm Fernando Nott, Media Manager for SBC, and your host for today, where I'm joined by SBC News editor Ted Ormclay. Ted, how are you today?
Ted Orme-Claye (01:10.796)
Very well, thank you, Fernando. Thanks for asking. How about yourself?
Fernando Noodt (01:14.324)
very good, very good. Very happy to reach Friday at the time of this recording. Of course, this episode will go live on Monday, so everyone will be just missing this day. but I'm sure it will be a good episode to start the week next week. So or this week rather. at the but enough with the timing references. Victor Kayad, journalist for SBC Media, how are you today?
Viktor (01:39.939)
Agents, I'm all right. Thanks for having me. good to be with you two.
Viktor (01:50.154)
So yeah, I'm slowly getting ready for my weekend slumber.
Fernando Noodt (01:54.627)
Yeah, absolutely, absolutely. and we have there's there's a a bit of of of a story developing in in the UK of so we're we're gonna have to slowly break it down and and separate what's being said from what's actually happening. So we'll try to to cover what's going on with the national lottery and the fourth national lottery license and
the National Audit Office's decision to review it. So let's start with with what's what's going on and what do we know about this this NAO decision to review it.
Viktor (02:33.62)
Right, so as some some of you who've been living in the UK would have seen the news around the lottery. The National Audit Office has apparently launched a study into the fourth national lottery license and one of the headlines that kind of grabbed my attention about this came from the telegraph. and having a read through it
there was a sentence that kind of caught my eye and I quote the National Audit Office has opened an investigation into whether the lottery under Owen, which is the lottery's current operator, is delivering as much charity as it could. Now, having read that I kind of thought to myself, wait a second, is this an actual investigation? So I went to the national audit office to read
its statement on it. And it turns out they've labelled it as a study rather than an investigation. So in my head, the wording around it could be a bit misleading because putting Owen and investigation into the same sentence s might be taken into a literal sense, at least by me, for the first time reading it. So how things are in
in factuality is that the National Audit Office is a body th whose role is to scrutinize other public bodies. So Owen being a private operator automatically puts it outside of the NAO's investigative remit. what's actually happening in context is that the NAO is conducting a study
into the national lottery. The scope of that study focuses on the Department for Culture, Media and Sport, D CMS, and the gambling the UK gambling commission's role in implementing and overseeing the lottery license which under Owen is gonna be managed from to tell from twenty twenty four until twenty thirty-four.
Viktor (04:58.536)
So yeah, that's that's one of the interesting parts about it. Tit, did you read the article? Wha what what came into under your attention?
Ted Orme-Claye (05:09.143)
mean, speaking a bit more generally, I think the national lottery is always something in this country, as it will be in many other countries as well, it's something that always gets a lot of public attention. Firstly, because of the life-changing amount of money that can be won, people are always interested in hearing about it just purely because of that. It's very widely, we always see in gambling commission stats, it's the most...
widely engaged with form of gambling, if you want to call it that, for the most part. So it's always got public interest. I think there's always an interest in the UK media to report on it and some of the goings on in the background. know that the public are interested. I don't think the National Audit Office's study into it is...
is anything particularly new. Obviously this is a new study they're doing, but what I'm trying to say is I don't think this is anything particularly out of the ordinary. A bit like what you said, Victor, you summarized the audit officer's role. There's something to an organization that is responsible for auditing other major public bodies. The National Lottery is a major public body. It generates millions, billions of pounds a year.
through ticket sales funneled into good causes. It effectively serves as a compliment to state tax revenue, doesn't it? I think that as pretty much as all state lotteries do, it's a fund into community projects and initiatives throughout the country. So the fact that the National Audit Office is taking a look at it, I don't think is anything particularly significant, like is anything particularly new.
I don't think all winning the National Lottery should be overly worried about it to begin with, but it does just show you how much of a spotlight there always is on the lottery as an institution, I think.
Viktor (07:00.5)
Yeah, yeah, definitely. And it's worth noting that the study itself is gonna be focused on the gambling commission and D CMS itself. no public no more details or any other public information has been released to what extent Owen will partake in the study. So yeah. it's although i it's it's I think the language
Using the language used to cover this story from my perspective should be carefully selected, at least is w what I think.
Fernando Noodt (07:36.45)
Yeah, I think it's good it's good to to clarify this, and to to to
Fernando Noodt (07:43.341)
the dots over the eyes, is that how you say it? But really maybe what's what got people confused or the media confused, maybe it's Alwins original pledge or or Alwins original bit that included a pledge to increase donations to thirty eight billion pounds over the license period before the commitment was revised and and and lower. So I think question
now that we've clarified what the study is about, is how how should we understand the difference between those initial ambitions initial ambitions sorry f by Owen and the targets that followed?
Ted Orme-Claye (08:28.791)
I mean, Alwin has some very ambitious targets, like you say, we had the initial target that you mentioned when the license was first awarded to them a couple of years ago. They've since set a target of doubling weekly returns to good causes from 30 million to 60 million. That's a really, really ambitious target, isn't it? I think that, know, Alwin in general is a very ambitious company, so I think this really just speaks more to their...
group-wide ambitions of being, the term they use is a lottery-led entertainment company. know that the UK, getting that UK lottery tender was a really big moment for them a couple of years ago. They'd already established themselves as a prominent operator in other markets. The Czech Republic, Greece, you know, we've talked on this podcast about the stakes they have in Greece.
building up a bit of a presence in North America as well. Getting that UK lottery contract was a really big moment for them and I think stating this intention further down the line to double these weekly returns to good causes, I think for them it's more of like a statement of intent that we're going to come in and we're going to do something big with this and they wanted to set that out very early, think. Set the target early to really set a precedent throughout the rest of the
year license I think that would be that that's my assessment of that anyway.
Fernando Noodt (09:56.527)
Yeah, and contributions actually to good causes reached one point seven billion pounds last year, but quarterly donations fell to three hundred seventy seven point two million pounds between April and June. So that's divided by multiplied by four and it won't reach one point seven, that's for sure. so what might explain this decline and how much of it can be attributed to the lottery's operator's performance?
Viktor (10:24.48)
mean for me it does raise a question, right? When performance falls behind expectations. it does kind of raise some question for Owen, but that underperformance could have a lot of reasons behind it. Could be the economic environment itself in the UK could be the
Ted Orme-Claye (10:48.3)
Mm.
Viktor (10:52.65)
The jackpot cycles themselves could be the egg could if we're looking at the operator it could be how those games are being marketed and and and delivered to market. so it's not it's not for Owen to to be blamed because of all this you know, lacking behind performance. However, one thing in the numbers that you
pointed out f a very interesting thing is that the drop from April to June according to the official data is the lowest quarterly represents the lowest quarterly figure in a decade. So this will definitely not help Owens case whenever further scrutiny arises in the future and I'm sure it's this will happen sometime down the line.
Ted Orme-Claye (11:52.254)
Yeah, I think Victor raises a very good point about the kind of the macroeconomic circumstances. We know that national lottery ticket sales have been struggling. This was something that we saw before, when we took over the license as well. think towards the tail end of Camelot's tenure, there was a lot of scrutiny around ticket sales and good causes. There always will be because of, you know, like we talked about earlier, the lottery's function is to be a fundraiser really, you know, a generator of revenue to support charity initiatives, community initiatives.
and so on, heritage programs, that sort of stuff. yeah, ticket sales have been struggling. think Victor makes a good point that we should look at the macroeconomic side of things of the economies across the world, the UK included, have been struggling with, well.
some struggles in recent years, COVID, the economic fallout from that, rising inflation. A lot of households have been tightening the fuel prices, energy, yeah, exactly. A lot of households have been tightening the belts and maybe just thinking, well.
Viktor (12:43.176)
Yeah. Fuel, energy.
Ted Orme-Claye (12:52.181)
we don't need to buy a lottery ticket this week, maybe we don't need to buy one at all, the odds of winning are pretty big, let's just be realistic for now and if we want to start buying again when times get better we will. So there is that. I think as well, Alwyn, the takeover period and the years after that threw a few different hurdles in their way.
Obviously there was the legal challenge from Camelot which started off pretty much immediately after the license was won. They were able to get that out of the way.
by subsequently acquiring Camelot and then think another lawsuit from a legal challenge, sorry, from IGT was dropped. That came ahead of the license, but that probably will have affected preparations a bit, maybe would have given them a bit more to go over, obviously a lot more to go over, legal challenges and acquisitions and so on. Since taking over the license as well, they've had to do a contractual upgrade to the...
to the National Lottery's retail infrastructure that they did last year and there's been some more projects around that going on. So there've been some investment and lot of time and resources going into that. And then there was also quite famously or perhaps infamously another legal battle that just came to an end this year, which was from Richard Desmond, who was another bidder for that license back in 2021, 2022 sort of time.
That was quite a big anchor, think, for both Orwin and the gambling commission, really, around the new National Lottery License. It was definitely a big hurdle in their way. you know, Victor and I could tell in the conversations we had with Orwin.
Ted Orme-Claye (14:35.523)
After that lawsuit was brought to an end after the High Court shut it down that the know the the amount of relief among from the company was It was very evident, you know, and they definitely see that as being something, you know This is this we can finally now get on with what we want to do So they've had a bit of they've had one or two things that have made it a tough road. I think It took coupled of the macroeconomic conditions, but obviously they still have a number of years left on the license. So
Viktor (14:44.735)
Yeah.
Viktor (14:51.232)
Yep.
Ted Orme-Claye (15:04.407)
there's still plenty of time for them to get those ticket sales back up, which is something they are working on doing. We know about the launch of Powerball and so on in the UK.
Fernando Noodt (15:16.77)
Yeah, well I guess we'll have to hash the wait and see whether they can turn the tide and and bring the the the business back up or not. But right now we're gonna do a very quick outbreak because there's more to discuss about this whole situation in the UK will be right.
jumping straight to question number six. how might this study affect confidence, blah blah blah. Unless you guys wanted to say something about either a four or five, like
Viktor (15:48.102)
Mm, four I think, is interesting. I don't know what Tid will say.
Fernando Noodt (15:50.457)
Four. Okay, let's pick up with from four and then jump to six. Maybe skip the skip the nationalization thing, since it's already like
Ted Orme-Claye (15:54.559)
Yeah, works for me.
Viktor (15:59.465)
Yeah, yeah. And this
Ted Orme-Claye (16:00.468)
Yeah, yeah, yeah, yeah, so we're a unsure on that one aren't we?
Viktor (16:03.786)
D SMS has br categor s has categorically said it's not gonna happen, so that's yes.
Fernando Noodt (16:08.928)
Yeah, that's why yeah. Let's just do like this by this goes out and this one goes down here. Bing, bim, bim, beep. Magic. There we go. Okay, so we should keep this brief because we're already past the time. Okay. Let's go.
And we're back with more iGaming Daily to continue discussing the news about the UK's national audit office, which launched a study into the country's fourth national lottery license. And so we were talking about how all we had high expectations or high high projections about how
how much of a it would turn to charity and it failed to to do so. So how how do you guys think responsibility should be divided between the operator, Owen, the gambling commission and the government when a major public facing lottery like this falls short of the expectation of the expectations they they set during the licensing process?
Viktor (17:11.55)
Yeah, I'll take that one first. You can then add on to it or correct me. I think there's the responsibility is ki should be kind of divided into three layers. you have the operator which is responsible for the commercial performance of the lottery. You have the gambling commission which is responsible for the oversight of that lottery and then you have the DCMS
which kind of is in charge of the overall policy framework within which this lottery operates. So when things go south and there is more to be desired from from from the performance, I think all these three sides should share kind of an equal level of responsibility and
scrutiny and I guess that's why the national audit office exists and that's what the latest study is gonna set out to assess
Ted Orme-Claye (18:24.471)
I think in my opinion ultimately, yeah, so how should responsibility divide it? Each, as Victor said, each party involved in this does have their own responsibilities that are quite clearly defined. I think really, obviously when it comes to, it's quite clear though, that when it comes to generating revenue, selling tickets, and returning to good causes, the first responsibility for that is with the company running the show. You know, that is their role as the contractual license holder.
So think first and foremost that is Orwin's responsibility. It is one that we know from what we've seen from the various initiatives they've done, from our own conversations with them, that is a responsibility they take very seriously. I think the, I mentioned the Powerball UK rollout earlier, I do think that was a very interesting move from them as a way of...
diversifying the lottery's product range and bringing in this new one that is quite attention grabbing that can, you know, has famously generated jackpots in excess of a billion dollars in the US on a couple of rare occasions. So, you know, that was quite an interesting move from them, I think, to create, try and get a bit more public buzz around the lottery once again. But yeah, ultimately that responsibility does lie with them. I think then I guess maybe secondary you've got...
Perhaps on an equal level DCMS and the gambling commission, the commission's role because obviously they are the one who ultimately chooses who operates the lottery. So that initial choice about who is going to be responsible for the day-to-day running and generating the good causes does come down to them ultimately in that license process. I guess ultimately they do only have the option of whoever is bidding at the time, but yeah, you can't rule out their responsibility there. Yeah.
Fernando Noodt (20:13.9)
And how do you think this this whole situation, this study, will affect confidence in the gambling commission's ability to oversee the national lottery and protect, of course, public value that it is expected to deliver?
Ted Orme-Claye (20:30.185)
It could, maybe it could shake a bit of confidence, but mean ultimately who else should be responsible for regulating and overseeing the national lottery other than the gambling commission? There's no other body that can really do it. That is the regulator's permit and for a country like the UK that not only has a national lottery but has a very extensive and...
very dynamic betting and gaming market, you need a solid central national regulator for that. Maybe there will be some scrutiny of how the commission conducts the role and how it conducts tender processes in the future perhaps, but I think ultimately the commission's role as the lottery regulator is set in stone I think.
Viktor (21:17.054)
Yeah, I agree with it. No matter the result of the review, I think it's it's good to have such such oversight over the commission. I t to a large extent it it to a la to a large extent it assures that the commission remains effective 'cause you know, it there is someone to assess its work constantly. and yet if
the results can come out good, it will strengthen the the trust in the commission. if there are things that could be worked on more it will help strengthen the commission's work in the future. So I think yeah I think the the it's it's it's whatever whatever whatever the results the Commission is is is gonna
benefit from it either either way.
Fernando Noodt (22:17.08)
What about the public perception of the wider gambling industry? How does this situation affect it? Particularly considering the social contribution, which which has like we said before, like it it went down from what it was expected to deliver. So how does this affect the the public perception of the industry in general?
Ted Orme-Claye (22:39.607)
I think the two are very separate in the public's minds to be honest. think people are aware that the lottery is a form of gambling but you know it's a very distinct form of gambling to the type that is often discussed in parliament.
that comes up in all these conversations around taxation and advertising regulation and so on. think that the big PR gold mine, the National Lottery, not just in the UK, but know, national lotteries all over the world have, is the role for what you've just mentioned for...
of the social role, the good causes generator, the link to charities. In the US, state lotteries are always heavily connected to education funds and things like that, aren't they? That role is always going to be very good for the lottery's image. I think it helps distinguish it a lot from the rest of the industry. Sports betting, casinos, online casinos, slots and so on. Horse racing.
Maybe I think the only knock-on effect could be if there was more of a... if something... if some scrutiny of the gambling commission and its role as the lottery overseer, you know, maybe there could be some knock-on effect there on the rest of the industry, but I think for the most part they're quite distinct. I think in many ways, you know, the way... I think betting and gaming companies could learn a bit from the public's perception of the lottery and how people view it as quite a positive thing that...
not only turns people into millionaires but also generates money for society.
Ted Orme-Claye (24:16.631)
The betting industry could look at that and go, well, we need to think about how can we promote ourselves based on whatever social roles we play, you know what mean? Because the industry gets a lot of flack for gambling related harm, societal impacts and so on. Maybe it should look at it, take a review of itself and go, well, what are our positive contributions to society, not just through taxation, but other ways and focus on that. We've seen the BGC doing that to an extent at the moment.
not just the BGC but other gaming companies, doing this to an extent on looking at how much tax they pay, the employment and so on, betting shops on the high street, the high street roll, things like that. But yeah, sorry, I've rambled a bit here, but no, think the public do see the two as quite distinct, but I think the industry could learn a bit from the public's perception of the lottery, if that makes sense.
Viktor (25:11.668)
Yeah, absolutely I agree with you Ted and on every every single point, I think yeah, the public perception is gonna be it it the the review is far from causing a a complete public trust fall. Like the national lottery as Ted said is is a beacon of a of of a social return initiative. So yeah, people still see it
very differently than a typical b than typical commercial betting or cause you know. So unless the lottery stops contributing anything at all tomorrow, yeah I think it's it's public it it's more about a political and regulatory topic rather than public perception issue.
Ted Orme-Claye (25:55.786)
Ha
Fernando Noodt (26:09.832)
And of course we will be following this story as it develops very closely, not only on SBC News, which
Read and subscribe to the newsletter to keep up to date with this and more stories about the gambling industry as they happen because we have the top coverage of Ted Om Clay's team together with Victor and and the rest of the gang. And of course, follow iGaming Daily on social media and subscribe on your preferred podcasting platform to listen to these conversations and more.
So guys will be following this very closely, like I said, because we'll see what the NAO's study concludes. but thank you very much for for this conversation. I think it's been it's been very very enlightening about what what's actually happening and what we can expect from it in the future. So thank you very much. Thank you very much, Ania McDonald, for producing this episode as well.
I'm Fernando Nott and to our listeners out there, we'll see you in the next one.