Fat Jackpots Vital To Health Lottery’s Survival
The Health Lottery, the charitable lottery bought by Richard Desmond’s Northern & Shell media company in February 2011, is making preparations for its nationwide launch at the end of September 2011. Compared to other private lotteries (either for charity or profit), the Health Lottery does have some factors in its favour but it will still need to position itself in the right niche to have a chance of succeeding.
The main reason for failure of private lotteries is that they struggle to compete with the brand, exposure, and jackpot prizes of a state-run or national lottery.
In the UK Camelot’ National Lottery has the benefit of prime time television shows on Saturday evenings for its main draw on BBC1, as well as other shows during the week. The National Lottery also has a network of over 26,000 retailers selling tickets for its games across the UK.
One of the National Lottery’ most popular games in recent years has been the Euromillions game.
The saga of Chariot’ Monday Lottery back in 2006 demonstrates many of the difficulties of establishing a new lottery. The Monday Lottery also tried to take on the National Lottery directly. It allocated 30 pence in the pound to good causes, higher than the 28 pence in the pound allocated by the National Lottery. Similarly, 55 pence in the pound was used for the Monday Lottery prize pool, compared with 50 pence in the pound for the National Lottery.
When choosing their numbers for their lottery ticket and making their purchase players are thinking about how they will spend the jackpot, not how much of their pound is going to good causes. If a lottery cannot offer a sufficiently attractive prize, it is more difficult to attract players. Week on week this becomes a downward spiral because ticket sales are not high enough to generate jackpots, and so the situation worsens for the lottery.
The Health Lottery does have the advantage of being supported by Northern & Shell’ portfolio of media titles once it launches. This portfolio includes national newspapers the Daily Express and the Daily Star, the celebrity magazine OK!, and the terrestrial television station Channel 5.
But promotion is not enough in itself, it has to be backed up by an extensive sales network for tickets. Of course, part of this can be done online but there also needs to be a deal with retailers to sell tickets too.
Each ticket for the lottery will cost £1 with 20 pence going to health-related causes and the top prize is GB£ 100,000. Mr Desmond aims to raise a minimum of GB£ 50 million per year for these causes as well as offering “life changing” prizes for players. On this basis the Health Lottery will need to have sales of GB£ 250 million per year to meet his target for good causes (assuming no contribution from unclaimed prizes).