New UK National Lottery operator Allwyn must do more to protect players from gambling harm and pay more to GambleAware after a “poorly managed” tender, MPs have said.
They also said Allwyn should work on "restoring the link" between buying a lottery ticket and supporting good causes because a lack of awareness could lead to public calls for a boost to prizes at the expense of returns.
The Digital, Culture, Media & Sport (DCMS) committee report warned the issues posed "existential questions about the future of the lottery".
The committee also said it was concerned after Camelot was fined earlier this year for the National Lottery’s inappropriate targeting of vulnerable consumers. The report highlighted concerns raised by gambling harm experts that this kind of targeting was being used to push forms of gambling that may be more harmful and which returns less funding to good causes.
It said the lottery operator and the Gambling Commission must enable research into the harms of gambling advertising and marketing. It also wants Allwyn to meet the Gambling Commission’s suggested donation to the GambleAware charity of 0.1 percent of gross gambling yield.
Other demands include GambleAware branding appearing on National Lottery products to signpost players to support and increase the visibility of the charity.
The recommendations follow an inquiry into the Gambling Commission's competition to award the next operating licence, triggered after the Gambling Commission’s confirmation in September that Allwyn Entertainment will gain the latest National Lottery licence from February 2024.
The move has been dogged with controversy, with Camelot launching legal proceedings challenging the decision, claiming the commission got the decision "badly wrong". The action led to the handover process being delayed and fears it could affect the running of the lottery and hit contributions to good causes.
The DCMS committee report concluded the competition was "poorly managed", saying it was concerned by reports that up to £600m could be diverted from the good causes budget due to the decision by Camelot to pursue legal action.
But it also slammed Camelot, which has faced growing criticism in recent years, and claimed that National Lottery ticket sales and donations to good causes had fallen as profits rose.
The report said the National Lottery's "stalling returns to good causes appear to be the result of choices made by Camelot, which has prioritised games that allow it to retain a higher percentage of sales as profit".
Camelot failed to make itself available for scrutiny during the inquiry, the committee said.
DCMS committee chairman Julian Knight said: "While the National Lottery has become a fixture of British life with millions enjoying its games each week, in recent years the ever more profit-orientated approach of Camelot has hit good causes in the pocket and pushed players towards potentially more harmful forms of gambling.
"Without a significant departure from the approach of the outgoing regime, you don't have to be Mystic Meg to foresee a future where a clamour for big cash jackpots is prioritised over the Lottery's original purpose to raise money for good causes, while more players are pushed towards gambling products that can seriously damage health and wellbeing."
A Gambling Commission spokesman said: "We remain resolute that we have run a fair and robust competition, and that our evaluation has been carried out fairly and lawfully in accordance with our statutory duties. In order to protect the integrity of the process, we will not be able to discuss the specifics until litigation has concluded.
"We trust the committee will be pleased to note that we are already committed to vigilant monitoring of the Fourth Licence and its Returns to Good Causes, as well as a full review of our licence competition design process which we will be happy to update the committee on in the future."
A Camelot spokesman said: "The report is incorrect to claim Good Cause returns are falling. In each of the last two years, Camelot has generated the highest-ever returns to Good Causes from ticket sales in the history of The National Lottery, with annual Good Cause returns now £530m higher than they were at the start of the third National Lottery licence back in 2009.
"We wrote to the committee to confirm we would be happy to appear once the competition — and then the subsequent litigation — had concluded."
Allwyn said in a statement: "Allwyn has committed to reinvigorating the National Lottery under the Fourth Licence, refocusing on safer draw-based games and ultimately ensuring that there is a far stronger link between players, good causes and local communities.
"Allwyn's focus will be on growing good causes returns over the course of the 10-year licence, in a safe and sustainable way.
"We want to show the National Lottery can be a benchmark for the wider gambling industry on how best to protect participants in today's digital world."
Allwyn has agreed to buy Camelot in a £100m deal that is set to end the bitter legal battle between the two and the risk of delaying the handover of the National Lottery.