Where Does Lottery Money Come From?

  • Updated
  • By Katie Thompson
lottery money

With multiple hundreds of millions awarded to lucky players week by week, it’s safe to say that the National Lottery fund is not short of cash – but where exactly does lottery money come from?

The National Lottery has been owned by the Camelot Group since 1994. Turning over £5.5 billion each year, the Camelot Group has rewarded the National Lottery Franchise every five years, a decision which is taken by the Gambling Commission.

The Camelot Group is certainly not short of money – originally formed as an association to bid for the National Lottery, its major partners include such big names as Cadbury Schweppes. In 2010, Canada’s Ontario Teachers’ Pension Plan bought the Camelot group for a whopping £389 million.

How lottery prizes are funded

Whenever a lottery player purchases a ticket, the funds are split to go towards various causes. Between 50 and 53% goes towards to lottery prize money itself – so where does the rest of the money go?

One-quarter of our ticket prices go towards the ‘Good Causes’ fund. These good causes denote public spending, so the money goes directly back into local projects including the arts, environment, charity and heritage.

Then, 12% is taken by the UK government to cover the ‘lottery duty’ tax, while operators the Camelot Group receive just 5% of all ticket prices. Of these funds, just 1% is classed as profit, while the rest covers operating costs.

Finally, ticket retailers take 4% of ticket prices as commission, so there really is a lot to be considered when we think about where lottery money comes from!

Is the National Lottery still profitable?

The National Lottery, rebranded as Lotto in 2002 in response to declining ticket sales, charges £2 per ticket, up from £1 per ticket before October 2013. Today, the Lotto draw sells between 15 and 45 million tickets per draw, making it a very profitable venture!

Of course, Lotto has had to reinvent itself a few times over the years in order to stay profitable.

For example, up until 2011, the top prize could only be ‘rolled over’ – adding the prize money into next week’s draw – a maximum of three times.

This increased to four times in February 2011 and remained the same until 2015 when the rollover limit was scrapped. Instead, Lotto introduced a jackpot cap, but the jackpot prizes were made substantially bigger, average £1.1 million for Saturdays.

This £50 million cap was exceeded in 2016 (the rule applied for anybody who matched six numbers; in this case, it didn't happen) and a total prize money of £66 million was split evenly between two winners.

Though some of the lottery funding changes were deemed controversial, the hike in ticket prices from £1 to £2 has proven beneficial.

For those who still like to spend wisely, however, there’s the option of the Thunderball or the Hot Picks draw, both of which cost just £1 to play.