Tuesday, 27 September 2011

Richard Desmond’s Health Lottery: ‘profiteering on the back of the British public’s goodwill’

Charity leaders have criticised a new lottery, being launched next week by Richard Desmond, for giving less to good causes than the National Lottery. The ‘Health Lottery’ will compete directly with the National Lottery. Mr Desmond plans to promote it across his (self-regulatory system exempt) publications including the right-leaning Daily Express, the EDL-supporting Daily Star and gossip photo-magazine OK! [class act! – Ed]. The draw will be shown at prime-time on ITV1 and Desmond’s own Channel 5 on Saturday nights; the maximum prize will be £100,000.

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The Health Lottery will give 20.34p of each £1 ticket to good causes, just 0.34p above the legal minimum it is required to give as a “society lottery” and it will not be required to pay lottery duty. The National Lottery, which is not a society lottery, gives 28p per £1, plus another 12p in lottery duty. Camelot, which runs the National Lottery under licence, is permitted a maximum profit of 0.5p per £1 gambled. The Health Lottery, in which Mr Desmond is the sole investor, declined to say what level of profit it expected.

If the Health Lottery meets its target of selling at least £250 million of tickets in the first year, it will give £20 million less to good causes than if the same sum had been spent on National Lottery tickets. Under the Gambling Act 2005, a society lottery can sell a maximum of £10 million of tickets a year. The Health Lottery has registered 51 society lotteries, giving it potential sales of £510 million.

While lotteries cannot be run for commercial gain, the Health Lottery can profit by acting as an “external lottery manager” for the society lotteries. Sir Stephen Bubb, chief executive of the Association of Chief Executives of Voluntary Organisations, described the Health Lottery as “a pretty disgraceful development”, adding: “The Government needs to look at lottery regulations to ensure it’s made transparent to people who play that this new lottery is giving a lot less per £1 to good causes.”

Nick Wilkie, the chief executive of London Youth, a network of 400 youth organisations, said: “It seems to me that if one runs a lottery and gives away less to good causes than the National Lottery, then one is profiteering on the back of the British public’s goodwill.” Martin Hall, the chief executive of the Health Lottery, said that he hoped to expand it into “a billion-pound business”.

Mr Desmond has signed up more than 40,000 retailers to sell tickets for his Health Lottery; that’s 12,000 more than the number of shops selling tickets for the National Lottery. The maximum prize is £100,000, which is guaranteed for all five correct numbers. Three correct numbers wins £50 and four £500. In its instructions to retailers, the Health Lottery says:

“When telling customers about the Health Lottery, remember the main features ... proceeds go to support local health-related good causes.”

Have a good day.