Financial Factors Leading to Discontinuation
United Kingdom: Approximately 900 post offices cease serving as National Lottery collection points
As stated in various news articles [Link in English], around 900 out of 4,800 post offices in the UK will no longer offer sales of National Lottery scratchcards and instant win games starting now. This translates to approximately 19% of the branches ceasing operations as collection points.
Effective from early February, the Czech gambling conglomerate Allwyn took over the distribution of all lottery products following a competitive bidding process against Camelot. Many long-term partners of the National Lottery, who served as collection points for decades, have chosen to discontinue their services due to economic reasons.
The fear of reduced sales, particularly in relation to instant lotteries, and in some cases, even potential losses, is driving vendors to make this decision. This apprehension is amplified by the new licensing agreements.
Increased Risk with New Contracts
Previously, there was a standard agreement between the National Lottery and the Post Office, allowing the Post Office to supply its branches with lottery tickets at no cost, in return for a 1% commission. This arrangement was terminated by Allwyn post-takeover. Now, the branch operators are responsible for purchasing and paying for their own scratchcards.
Should the scratchcards not be sold, the branches would bear the entire cost of the unsold inventory. Given that scratchcards are renewed approximately every six weeks, this issue is further compounded.
While branches have the option to enter into 10-year independent contracts with Allwyn, these contracts stipulate that both lottery tickets and scratchcards must be sold. Many operators, citing the significant risk associated with scratchcards, have reportedly expressed their preference for selling only lottery tickets, a possibility that currently is not available.
The manager of a post-office in Scotland, Calum Greenhow, voiced his concerns in an interview with BBC, expressing his wish to sell only lottery tickets due to the high risk involved with scratchcards:
“If we didn't sell the scratchcards, we'd still sell the lottery tickets.”– Calum Greenhow, manager of a post-office in Scotland, BBC**
Implications for Allwyn and the National Lottery
The loss of 900 post offices, while significant, should not significantly impact Allwyn. The National Lottery continues to boast approximately 40,000 collection points across the country, including supermarket chains and petrol stations. Consequently, a diverse range of lottery products remains readily available.
Thus far, over 98% of sales points have agreed to the new licensing terms, indicating that further significant losses are unlikely in the near future.
Allwyn's Appraisal of Independent Contracts
In spite of the concerns voiced by retailers, Allwyn publicly praised its new contracts, asserting that it had devoted the past year to making the transition as seamless as possible for retailers. Allwyn emphasized that retailers stand to benefit from the independent contracts, particularly in earning 100% of the sales commission in the future.
Following the news of Allwyn's takeover, many long-term partners of the National Lottery are reevaluating their participation due to economic reasons, as mentioned in several news articles. The new licensing agreements, which involve the purchase and payment for lottery products, have increased the risk for branch operators, leading some to consider selling only lottery tickets instead of scratchcards.
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