People’s Postcode Lottery – Supplementary written evidence (GAM0110)

Author: Malcolm Fleming, Head of Public Affairs, People’s Postcode Lottery.

1. People’s Postcode Lottery appreciated the opportunity to give oral evidence to the Committee on 28th January and to explain our charity fundraising model, including the positive impacts this type of low risk activity can have on society. Further to that evidence we would like to make a few additional points which we hope are of interest to the Committee.

2. Marketing costs increase since 2010.

2.1 The Committee asked that we clarify our increase in marketing costs since 2010, further to claims from Camelot about People’s Postcode Lottery’s marketing costs.

2.2 Camelot claimed that People’s Postcode Lottery increased marketing costs between 2010 and 2018 by 556%. This is factually incorrect.

2.3 In 2010 the audited accounts of Postcode Lottery Limited showed operating expenses of £15.5m. Our management accounts show that £8.5m of this related to external marketing spend.

2.4 Our latest audited accounts, for the year ending December 2018, show operating expenses of £82.7m and our management accounts show that £34.3m of this related to external marketing spend.  

2.5 Taken together these therefore show an increase of £25.8m over 8 years, being 304% and equating to 19.1% per year.

2.6                        Over the same period funds to good causes increased from £4.4m in 2010 to £116.9m in 2018. This is an increase of 2,533% and equates to 50.3% per annum. For every £1 spent on marketing in 2018 £3.40 was raised for good causes.

2.7 In our oral evidence we stated a total 2018 marketing spend of £43m. This figure includes internal staff costs, website management, and significantly, the costs of communicating and informing our existing players about what they support.

3. Marketing, Operational and Capital Costs 2018.

3.1 The Committee asked that we provide data relating to our advertising, operating and capital costs.

3.2 In 2018 (the last year for which we have audited accounts) the promoting societies that partner with People’s Postcode Lottery paid, in total, a lottery management fee of £102.3m to run the lotteries.

3.3 £17.05m of this consists of unrecoverable VAT and therefore the audited accounts of Postcode Lottery Limited show lottery revenue of £85.2m and of this £82.7m was spent operating and marketing the lottery.

3.4 Our management accounts break this down as follows:

Advertising (external marketing spend):              £34.3m

Licence Fee:                                                         £14.6m

Other operating costs:                                          £33.8m

3.5 As well as staff, office and technology costs, operating costs also include the costs of servicing and communicating with our player base. They also include £0.9m of depreciation and amortisation of capital investments. Our 2018 capital costs were £0.19m.

3.6 Between 2008 and 2014 Novamedia invested £60.2m in Postcode Lottery Limited in the forms of loans that were ultimately waived. Without this support it would have been impossible to establish People’s Postcode Lottery in Britain, raising over £500m for good causes to date. The licence fee paid to the Novamedia Foundation enables it to invest in establishing charity lotteries elsewhere in the world, raising more and more for good causes. To date Postcode Lotteries in the Novamedia family have raised more than €10bn for good causes.

4. Tracking of players

4.1 The Lord Bishop of St Alban’s asked about players People’s Postcode Lottery had tracked under duty of care but who then had their subscriptions cancelled. In the oral evidence session we gave this figure as approximately 400. The exact figure is 433. This relates to cancellations to the end of November 2019.

4.2 Committee members may be interested to know that in total since 2005 until the end of 2019 People’s Postcode Lottery have blocked 3,227 players. This includes players who were blocked for problem gambling, as well as out of concern due to other reasons such as advancing dementia. Unfortunately, our historic data does not allow precise disaggregation of the different reasons.

20 February 2020