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UK online lottery company fizzles

Insider BuzzInsider Buzz: UK online lottery company fizzles

Editor: Lottery Post previously reported that the creators of this 'alternative' UK lottery had allegedly enriched themselves more than the charities the lottery is supposed to support.

Are the owners squeezing out the profits and then leaving the company and its stockholders in the lurch? 

It started out as a small but brazen challenger to the national lottery, hoping to capitalize on a stream of damaging stories that have caricatured many of the good causes benefiting from lottery cash as unworthy or ridiculous.

But last night, Tim Holley, chairman of the company behind Monday, an online-only lottery, was believed to be close to resigning as the company found itself on the brink of financial ruin after just four weeks in operation.

Mr. Holley and two fellow directors have also received payouts worth more than the £520,000 donated to the 20 charities linked to Monday.

Computer system hiccups, a poorly received publicity campaign and regulatory constraints have all been blamed in part after Chariot, the company behind Monday, admitted it had failed to come anywhere close to its target of 5m ticket sales a week. After the first four draws, held each Monday, total tickets sold have reached just 1.7m and are in steady decline as the impact of a costly television advertising campaign to launch the lottery fades. Sales in the run-up to last night's draw could prove critical to the company's future.

Chariot, which has burned through almost all the £15m funds raised for its launch, described current sales as "unsustainable". Six weeks after the company floated on the stock market, raising £10m, the board's deputy chairman, Peter Jones, is scouring the City for yet more cash to keep the business alive. Mr. Holley, a former chief executive of the national lottery operator, Camelot, is understood to be taking a back seat as he considers his position.

If it does not get the additional money, Chariot shareholders are being told, the company — which four weeks ago was valued at £29m — will go bust. Shareholders have already watched their shares plunge by more than 90%.

Mr. Jones, who is also chairman of the Tote, was also appealing last night to likely players of the online lottery to keep buying tickets. "The key thing to say is that the 55% of money going to prize winners and the 30% going to charities is completely protected," he said.

Asked how long the company could survive without an injection of cash, he said: "We are not going to go bust tomorrow, but for the sake of the stability of the company we want to do this [raise additional funding] sooner rather than later." He insisted Monday had a "very good future" as a smaller company with vastly reduced costs.

Six weeks ago Mr. Holley unveiled Monday's negative marketing campaign, which attacked the national lottery he used to run. "We've taken three years to develop this and we know it will succeed," he said. Publicity surrounding the launch boasted that a greater slice of Monday ticket money — 30p in every pound — would go to charities than goes to "so-called good causes" under the national lottery.

Those playing the Monday lottery at the web site are able to select where the charitable proportion of their ticket price goes from a list of 20 charities.

Chariot hoped this would appeal to those disenchanted by a number of controversial lottery funding projects. Most recently funding distributors were criticized after it emerged that thousands of pounds of lottery money had been allocated to help provide fitness classes for staff at Manchester United football club.

As well as being more generous to charities, Chariot's aggressive marketing promised punters a better chance of winning. Those with a Monday ticket are 27 times more likely to win a jackpot payout, though the top prize is substantially lower. It is this claim that is believed to have most stung Mr. Holley's successor at Camelot, Dianne Thompson. She has refused to be drawn into a public squabble, but remains confident the national lottery is still the best option for players hopeful of winning jackpots and other prizes. "People don't play the national lottery to give money to good causes. If they want to give, they put a pound in the charity box."

Camelot stresses there have always been hundreds of small, charity-focused "society lotteries", many of them operated locally in support of hospitals and other specific charities. It does not want to be seen as a competitor to these fund-raising efforts.

Mr. Holley's negative campaigning has been seen all the more forceful given his controversial tenure at Camelot. After launching the national lottery in 1994, he was heavily criticized when he received a £360,000 pay packet. A picture of him snoozing in a deckchair in St James's Park in London on the day of Camelot's results appeared in many newspapers and the company was nicknamed "Grabalot". Mr. Holley, who was furious at the time, has the photo framed on his sitting room wall.

A firm controlled by Mr. Holley received £200,000 when Chariot floated on the stock market. Chief executive, Craig Freeman, received £125,000 and the founder, Suzie Counsell, a former charity fundraiser, received £250,000 for the "intellectual property rights" behind Monday.

FAQ: Monday lottery

What makes this lottery different?

Players buy tickets at the web site and choose which charity, from a list of 20, they want to benefit.

How can it be more generous than the National Lottery?

The saving Monday makes from not being eligible for 12% sales duty on tickets means it can, in theory, turn a profit and return 55% to players in prizes and give 30% to charities. The National Lottery gives 50% back in prizes and 28% to good causes.

Why is it not more popular?

Monday says there were problems accessing the website in the first week due to demand. Others criticize costly advertising, saying it failed to make clear how the lottery worked.

Sales also may have been hurt by allegations that the owners of the so-called "charity lottery" were taking a substantial portion of the profits themselves.  Such allegations may have turned the public perception of the lottery from a good cause entity to a private, profitable enterprise.

Additionally, the lack of any multi-million-pound jackpots would be an instant turn-off for fans of the UK's popular Lotto 6/49 game.

Guardian, Lottery Post Staff

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3 comments. Last comment 10 years ago by Rip Snorter.
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Avatar
New Mexico
United States
Member #12305
March 10, 2005
2984 Posts
Offline
Posted: June 6, 2006, 10:54 am - IP Logged

"People don't play the national lottery to give money to good causes. If they want to give, they put a pound in the charity box."

 Contrary to a long history of contradictory evidence, there's someone in the UK who has a brain.

Jack

Absorb the good, ignore the bad, weigh the ugly.

It's about number behavior.

Egos don't count.

 

Dedicated to the memory of Big Loooser

 

    LOTTOMIKE's avatar - cash money.jpg
    Tennessee
    United States
    Member #7853
    October 15, 2004
    11338 Posts
    Offline
    Posted: June 16, 2006, 1:12 pm - IP Logged

    i definitely agree with you there jack.also the UK has different laws than we do here for online gaming.

      Avatar
      New Mexico
      United States
      Member #12305
      March 10, 2005
      2984 Posts
      Offline
      Posted: June 16, 2006, 5:22 pm - IP Logged

      i definitely agree with you there jack.also the UK has different laws than we do here for online gaming.

      Mike:

       So it would seem.  If it's legal there:

      A private lottery that doesn't try any monkey tricks or shell games with the money,

      just paying out in cash value minus, say, 20 percent operating expenses and profit,

      ought to be a license to mint money for  the owners and a boon for lottery players.

      So, you gotta ask yourself, why all the sleight-of-hand and carnival barker rhetoric about the charity thing? 

      Sounds as though things have gone too far down the slippery slope in the UK, just as they've done here.  Even private enterprise there evidently can't visualize an honest game without a lot of skim and eyewash.

      Too bad.  Even if the payout was only equal to cash value (which would be an awful ripoff) to the state and multi-state games, I'd play them religiously, those private games, instead of PB and the alleged pick 5 available to me in my state.

      But, of course, it ain't legal here.  And it evidently ain't possible there because of what's come to be known as mental challenges.

      Speaking of which, maybe that's the way it can come to pass in the US.  Some charity with the ability to lay on the collective guilt might be able to get by with with starting a major lottery operation and maintaining it.  When the uniforms and suits start crawling through the wire, it's media carnival time.

      I think hmmmm the National Association for the Advancement of Elderly Folk might be able to pull it off.  Or the Special Olympians for Homeless whatchallit, animals and stuff.

      Jack

      Absorb the good, ignore the bad, weigh the ugly.

      It's about number behavior.

      Egos don't count.

       

      Dedicated to the memory of Big Loooser