As the next license bid to run the National Lottery looms, present incumbent Camelot is not relying on Lady Luck to persuade the National Lottery Commission to award it the license for another term. The company, which describes itself as the “custodian” of a “national institution”, has put its money into exceeding regulatory requirements on social responsibility – particularly when it comes to players – to woo the regulators. Briefing speaks to Corporate Responsibility Manager Clare Griffin to find out how they are doing it.
Camelot is the unseen hand behind household brand the National Lottery, working behind the scenes to develop and run games to raise funds for social projects and a variety of other ‘Good Causes’ across the country. Responsibility for allocating the funds, however, lies with 15 National Lottery Distribution bodies.
Owned by five shareholders – Cadbury Schweppes, Royal Mail Enterprises, De La Rue Holdings, Fujitsu Services and Thales Electronics – it has 900 employees. In 2004/05, its pre-tax profits were £47.2m.
The company develops and manages the lottery infrastructure, the terminals used to sell lottery tickets (now all printed on recycled paper) and the technology behind them. It also markets the games and provides services for players and winners and works in partnership with the retailers who sell lottery products. It offers players a portfolio of products from draw-based games, to scratchcards and online ‘Instant Win Games’.
Camelot has held the license to run the lottery since 1994. It is the terms of the license that present its biggest business challenge – the obligation to maximise the money which goes to good causes, while ensuring that the lottery is operated in a socially responsible way, with “all due propriety” and that the interests of the players are protected.
These terms make explicit the conundrum faced by many businesses – the need to balance a mandate to grow profits while minimising negative impacts on consumers. It is an issue that food companies will relate to in the age of obesity. In the case of Camelot, however, a failure to achieve this balance could result in the loss of its license to operate.
Part of the company’s strategy has thus been to encourage as many people as possible to spend small amounts on lottery tickets. It has cost £1 to play the lottery since it began ten years ago. Although one of the newer games, the pan-European EuroMillions game retails at £1.50 in the UK and 2 euros in Europe, and a number of scratchcard games for £2 and £5 are available from time to time, there are no price rises in the pipeline.
Current statistics indicate that around 70% of the population plays the National Lottery regularly, spending an average of less than £3 a week. Compared with other lotteries around the world, Camelot is ranked 5th in terms of sales, but only 58th on per capita spend.
Many companies state that embedding CSR throughout their business practices is their primary goal. For Camelot this is not a goal but a necessity when it comes to the development, marketing and sale of its games. This explicit requirement for responsible gaming is also a driver for involving senior executives in the management of corporate responsibility.
CR management
Camelot introduced two board-level steering groups on corporate responsibility, after a strategic review in 2004/05 recommended that it enhance its structures for managing CR. The Corporate Responsibility Board, chaired by CEO Dianne Thompson, comprises directors from across the business – including corporate affairs and commercial operations – so that all relevant CR issues are internally represented at a senior level.
An Advisory Panel on Corporate Responsibility, chaired by the Camelot’s deputy chair, non-executive director Gerry Asher, complements the work of the CRB. The APCR is made up of independent members with expertise and knowledge of specific areas of the CR agenda. The purpose of a panel of external experts is, says Griffin, to scrutinise the company’s decisions; offer advice on best practice and innovation; and provide a forum for debate when Camelot is trying to balance the conflicting demands of stakeholder groups and business. The CRB and the APCR meet quarterly.
Griffin leads a team of four (FTE 1.8), which reports both to the CRB and to the APCR, and ultimately to CEO Dianne Thompson. The team serve as advisors to the business and as catalysts for promoting change within the organisation. Griffin’s role is not to take responsibility for achieving CR outputs. Instead it is to provide recommendations to the steering groups; develop the CR strategy; set priorities and advise on best practice.
Three lines of enquiry feed into the development of the CR strategy – defining the company’s priorities internally; asking stakeholders what they think Camelot’s responsibilities should be; and assessing likely priorities for the future based on the objectives of the business.
Once the strategy is defined, Griffin’s team coordinates the activities of specific managers to ensure that it is implemented. For example, the marketing department takes responsibility for testing new games so that they don’t unduly appeal to under-16’s.
Community investment
The company’s primary purpose is to maximise the money it raises for good causes. According to Camelot’s 2004/05 corporate responsibility report, for every pound of profit the company makes, £56 goes to good causes. Over the past 12 years, it has raised more than £19bn, with lottery funds allocated in over 240,000 grants to projects across the UK, many of which generate a ripple effect of benefits for local communities.
For example the physical regeneration of London’s Bankside district, from the reconstruction of the Globe Theatre, to the development of the Tate Modern and the restoration of Southwark Cathedral, owes much to National Lottery funding. A study of the impact of the lottery by management consultancy Henley Centre suggests that the Tate Modern alone generated 3,000 jobs, half of which were in the local borough, and boosted tourism in the area by almost a quarter.
Over and above this, Camelot channels 5.5% of its pre-tax profits into community programmes. The bulk of the company’s community investment is managed through an independent Camelot Foundation, which has a budget of £2m a year.
The Foundation serves a purely philanthropic role, with grants given simply to make a difference rather than to further business objectives. While Camelot is represented on its board of trustees, its aims are independent from those of the company. Its focus is on grant giving and research programmes aimed at bringing young people between the ages of 16 and 24 who have been excluded from society back into the mainstream. Camelot also makes some direct contributions to local charities.
The other way in which the company contributes to the community is through its support for employee engagement. Camelot provides matched funding up to £5,000 for all its employees as well as four hours a month for volunteering. CEO Thompson takes up both volunteering and fundraising. Community involvement at a senior level has helped the company to boost employee engagement figures – over a quarter (26.5%) of staff were involved in supporting the community in some way, including staff contributions through Give As You Earn in 2006/07, up from a figure of less than a tenth (7.1%) in 2004/05.
Staff also participate in volunteering challenges coordinated by BITC Cares. These are managed out of the training department rather than the community team as they are seen as a means for improving cross-functional team building.
Camelot is a member of the London Benchmarking Group and uses the LBG model to measure the impacts of its contributions in cash, kind and time.
Stakeholder engagement
Camelot defines its stakeholders as any group that has an impact on its operations, or that Camelot’s operations impact upon. These fall into eight categories – players and winners; employees; shareholders; government bodies; retailers; suppliers and partners; local communities; and public interest groups.
Camelot has developed bespoke programmes for each group of stakeholders, meeting with them to look at how the business impacts on them; to better understand their needs; and to shape the company’s policy and practice on responsibility.
Griffin says the meetings are very useful for understanding from an external perspective concerns about policy, practice and the products the company is developing. “Some of our biggest critics don’t think there should be a national lottery at all, but they have been prepared to engage with us nevertheless,” she says.
One of the challenges highlighted in the company’s last corporate responsibility report was how to ensure that stakeholder consultations feed into business decision-making processes. This is one of the reasons why Camelot tries to talk to groups and survey them at an early enough stage for their opinions to influence the company’s strategy – which means that information shared at these forums often isn’t in the public domain yet.
Another approach to tackling this issue is involving senior management at stakeholder forums relevant to their business function. For example, the director of commercial operations co-chairs the retail forum. “Stakeholder engagement is not just in a little CSR corner,” says Griffin, “it is integral to the business”.
Griffin notes that organisations continue to return to stakeholder meetings with Camelot, because, she suggests, they feel they influence the company’s decisions. “Obviously the company does not always agree with the input we receive nor will we always act on it.” says Griffin,” but as long as stakeholders continue to feel we are listening, they continue to engage with us.”
While the company holds formal forums to interact with stakeholders, Griffin adds that they will talk to “anyone and everyone on an ad hoc basis” if there is something to discuss.
Responsible gaming
Camelot’s challenge is to develop games that are interesting and engaging and which encourage people to play the lottery, while preventing both excessive play and illegal play by people under the age of 16. It has a threefold approach to responsible gaming – having a strategy in place to prevent harm in the first place; monitoring the impact of its products; and acting if there is cause for concern.
Central to developing the company’s strategy is consultation with public interest groups. Mark Gallagher, the company’s director of corporate affairs, chairs the forum, which meets every six months. This cross-sector forum comprises organisations and individuals with an interest in responsible gaming and gambling and protecting the potentially vulnerable.
Camelot also raises awareness of problem gambling by providing support for and participating in industry bodies and initiatives, with the aim of encouraging industry-wide codes and practices.
Camelot’s Game Design Protocol helps identify the level of risk new games pose to vulnerable groups, so that they can either be altered, or their impacts mitigated via marketing campaigns. Its Advertising and Sales Promotion Code of Practice governs the marketing of products and prohibits advertising in media spaces and channels with exposure to children under 16, such as billboards near schools. Nor does it allow the company to present the lottery as a way to solve financial problems.
Since the company’s 26,000 retailers have direct contact with players, Camelot provides regular training for retailers to help prevent underage or excessive play and provides them with registers to record refused sales. Over 10,000 visits are made to retailers every year under Operation Child, a test-purchasing scheme to assess compliance with the requirement not to sell to underage players. Monitoring and controlling excessive play, on the other hand, presents a challenge for retailers who ultimately “just have to use their own judgement”, says Griffin.
The National Lottery website incorporates checks and balances to prevent players registering fraudulently or illegally and limits the possibility for people to “get sucked into games”. It has accreditation to GamCare’s Social Responsibility Code of Conduct.
In conclusion
Currently figures from GamCare show that less than 3% of first time callers to its helpline attribute problems to lottery games. This statistic, combined with average spend by players, is key to Camelot’s analysis of whether it is achieving its goal of growing the National Lottery responsibly. The question is, with nearly three-quarters of the population already playing the lottery, with average spending hovering at the ideal maximum of £3 a week, how much room does Camelot have to grow its revenue further?
A broader portfolio of lottery games and expansion into different distribution channels has helped it achieve year-on-year sales growth for three years running, but says Griffin, “we will not do anything that jeopardises the lottery’s overall aspiration to grow sales in a socially responsible way”. It’s a balancing act though – introduce too many checks and balances and the money raised for good causes decreases. Behave irresponsibly and good causes benefit at the expense of problem gamblers, and possibly, as Camelot is all too aware, the company’s license to operate.
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