It is a bold company that doubles its prices overnight. Yet for Camelot it should not matter: if customers pay twice as much for lottery tickets they will win twice as much. Nevertheless, will £2 put off punters?
The lottery is all about percentages. Half of each ticket sale comes back as prizes, 28 per cent goes to good causes, 12 per cent to the government in tax with the promoter and retailers splitting the rest. Even at £2 a ticket, 98 per cent of purchasers will win nothing and 98 per cent of winners will receive the minimum, token, prize. In theory, the ticket price is irrelevant.
In 1995, a year after the UK lottery was launched, Camelot boldly announced that ticket prices were being held at £1 as though this was a contribution to beating inflation. Well it could hardly increase them to £1.03, then £1.06 the following year so that they gradually reached £2 (which would not be for a few years yet if the price was linked to the inflation rate).
If people wanted to spend £2 they could buy two tickets – different numbers if they didn’t expect to win, the same numbers if they did. Indeed, introducing a Wednesday draw gave the chance to spend a second pound.
But while the value of lottery tickets does not change by doubling the price, there could still be a resistance to purchasing. Adding a zero and making the tickets £10 – and the prices ten-times greater – would be the same value but the outlay would deter many. Look at the proliferation of pound-shops on Britain’s high streets to see that some retailers see £1 as a key pricing point.
Camelot is taking a risk therefore. Sales of draw-based games are running at £10bn a year with another £2bn of instant-play games. Sales have risen by more than a third since 2002 - partly by adding games and partly by remarketing – but before then they were dipping as the public tired of playing and realised how impossible 14m-to-1 odds of a jackpot really are.
The rise in the price of Lotto tickets in the autumn of 2013 will thus be accompanied by a tweaking of the prizes to “re-energise” the game. By definition, the jackpots will be bigger – which provides a marketing opportunity - but the odds do not change.
Will the public be fooled by bigger prizes for a ticket that costs only a pound extra? Or will £2 suddenly seem expensive for a flutter that is usually pointless? Having never raised its prices in 19 years, Camelot is entering new and dangerous ground.