Over the last five years Camelot has done little to ingratiate itself with lottery players. First it doubled the price of National Lottery draws to £2 in 2013, then it slashed the odds of winning by increasing the number of balls back in 2015.
Throw in the increase in the price of EuroMillions tickets in 2016 and increased competition from more innovative operators such as the Health Lottery and Lottoland, and it’s hardly surprising the incumbent operator has experienced a steady slump in sales.
The 2017/2018 financial year saw something a turnaround, which even Camelot wasn’t expecting if comments made by its CEO Nigel Railton are to be believed. It had already taken some action to reverse the decline in sales following its strategic review last year and earlier this month it announced some further tinkering around the edges of the main games.
More interestingly, however, it also announced the planned launch of an annuity game next spring. Though it hasn’t divulged much detail on the proposed product, it says the top prize is likely to be “thousands of pounds every month for at least 25 years”. Although Camelot says the game is an “entirely new proposition” to its portfolio, it acknowledges it isn’t a new concept.
“We’ve been closely examining what is done in other countries where this type of game is hugely popular – particular in the US and Australia,” says James McGrath, communications manager at Camelot. “These types of games appeal to people who dream of lifelong financial security. This is why we believe it will round off our portfolio perfectly, enabling winners to benefit from a regular, fixed amount of money over a set number of years.”
While the forthcoming game may be the first in the UK from an official lottery, both Lottoland and Zeal Network’s MyLotto24 already offer punters the chance to bet on US annuity lottery Cash4Life, with a top prize of £1,000 per day for the rest of the winner’s life. “This is not innovation from Camelot, it is them playing catch-up,” comments Nigel Birrell, CEO of Lottoland.
The question is, could an annuity lottery allow Camelot to catch up when it comes to where it wants its sales to be? Indications from the secondary lottery providers are promising.
Lottoland was the first secondary lottery operator to offer bets on Cash4Life in the UK, launching its product back in April 2016. Of its performance so far, Birrell says: “Cash4Life is one of our consistently steadily performing jackpot offerings, not as popular as our leading products but definitely a core part of our overall product portfolio.”
MyLotto24 began offering bets on the lottery in the middle of last year. Blerina Essen, managing director of MyLotto24, says it is also happy with its performance so far. “It is a very good product, it is growing very much organically — we are already in multimillions in revenue and we are increasing double digits in month-on-month growth.”
Interestingly, she says most of the customers betting on Cash4Life with MyLotto24 are using subscription products, suggesting it may attract a more loyal following than lump sum jackpot draws, which many only play when the prize has reached a certain level.
There’s also a possibility annuity lotteries could help attract more of the much-coveted millennials. “Those at the younger end of the spectrum see the value in winning £1,000 per day for life,” says Birrell. “If you take a 25-year-old and take the average life expectancy of 80 years, they would win over £20m over their lifetime.
“Not surprisingly those in the age brackets 18-23 and 24-30 over-index against the average lottery demographic and our silver surfers under-index here.”
Indeed, when a Canadian woman won a lottery draw she entered to mark her 18th birthday in March this year, she made international headlines after being given the choice of a $1m lump sum payout or $1,000 per week for the rest of her life – many North American lotteries offer the choice of a lump sum or an annuity. She chose the weekly sum after taking advice from a financial adviser.
Financial security is a big attraction for players of all ages, says Essen. “It doesn’t change your lifestyle as much as a big jackpot, but you have that cash comfort, that is why people like it.
“When you win 100m or something like that, you could blow it away as some people don’t manage money that well. Therefore people prefer to have this comfort that they can still have their own lifestyle, but maybe have a different job or have their own company.”
Birrell adds that Cash4Life also has better odds than many other games. “As Cash4Life has a format of match five from 60 and then for the CashBall one from four, the odds to win the jackpot are very attractive at one in 22m – that’s more than twice as good as UK Lotto at one in 45m and substantially lower than the pan European giants — one in 139m of the EuroMillions or one in 95m on the EuroJackpot.”
Many a cynical commentator has also noted that annuity winners are able to largely avoid the demands for money that lump sum winners tend to attract from long-forgotten friends and family.
It seems then that for a variety of reasons, annuity lotteries do appeal to a certain group of players. But whether or not Camelot’s offering will be a success remains to be seen.
If it is, a likely side effect will be an uptick in sales for secondary lotteries. Although they will not be able to offer bets on Camelot’s product, the increased awareness of the annuity concept among UK and European players — an annuity lottery has also recently been launched in Germany — will probably see more players wanting to place bets on products such as Cash4Life.
“Definitely we will get quite a lot of sales from it,” says Essen. “The products that are pushed through external advertising perform much better than other products that are not as known in certain countries.”
She highlights Australia, for example, as one of the areas where Cash4Life has been particularly popular with MyLotto24 players, which she puts down to annuity lotteries being offered by official lotteries in Australia.
Another bonus for the secondary lotteries is insurance savings – neither Lottoland nor MyLotto24 insure bets on the products, presumably because the winnings are easily able to be paid from their profits in the relatively unlikely event of a winner, although it’s worth mentioning that MyLotto24 had a second prize winner — who receives £1,000 per month — on Cash4Life in the first week it offered the product.
As well as alienating players with its game changes in recent years, Camelot has also cultivated a rather hostile relationship with secondary lottery operators. Ironically, in this latest attempt to appease the former it may well be the case it ends up providing a boost for the latter.
Camelot pledges higher prize payouts on National Lottery
Camelot reveals record UK National Lottery digital sales
Selling the dream: lottery providers cash in on jackpots
Are experiences the key to getting millennials to play lottery?