National Lottery Prizes
When you buy a National Lottery ticket for £1, not all of that money goes directly to the prize fund. This should not really come as any great surprise, as the national lottery itself costs a lot of money to operate, but some players are keen to know exactly how lottery money is divided. The aim of this article is to provide that information.
Let’s start with explaining how each £1 used to buy a lotto ticket is divided:
- 45p is allocated to the prize fund for the drawing. This money will in turn be divided between the various prize levels, as detailed later.
- 28p is allocated to the National Lottery Distribution Fund. This is also known as the “Good Cause Fund” because the money here is used to support charitable, cultural, social and sporting organisations.
- 12p is handed over to HM Customs and Excise as betting duty, and this money is commonly referred to as the “Lottery Tax”.
- 5p is retained by Camelot, the National Lottery organiser, in order to cover their costs, make a profit and to create hugely over-inflated bonuses for the Directors.
- 5p is retained by the lottery retailer who sells you your ticket (which is why many shopkeepers would give their right arm for a licence to sell lottery tickets).
- 5p is set aside for Superdraw and Scratchcard prizes in the future. When you add this to the 45p allocated to the main lottery prize fund, it means that, in one way or another, we effectively get back 50p from every £1 we spend in on tickets.
What happens to the 45p?
We said earlier that 45p in the £1 is allocated to the prize fund. But how exactly is the prize fund itself divided between the various prize tiers? The approach used by Camelot is described below:
- First, the amount of money required to pay out the £10 prizes won by players matching three main numbers is deducted from the total prize fund. The reminder is allocated to the other prize levels as follows:
- 52% and any rollover jackpot from the pervious week is paid to jackpot winners who match six main Lotto numbers. If there are no jackpot winners then this amount will usually be rolled over to the following draw unless the maximum number of rollovers has been reached, in which case it will be given to players matching five numbers and the bonus ball.
- 22% is paid to players who match four main numbers.
- 16% is paid to players who match five main numbers and the bonus ball. The only exception to this is when nobody has won the jackpot and there cannot be a further rollover, as explained a moment ago.
- 10% is paid to players who match five main numbers but no bonus ball.
Some readers will be surprised that the percentage allocated for those matching four numbers is greater than that allocated to players matching five main numbers or five main numbers plus the bonus ball. What we need to bear in mind here is the number of likely winners at each level. For example, although there is less money allocated to five numbers and the bonus ball, the number of winning players at this level will usually be so small (in comparison to the number of players matching just four numbers) that they are all likely to win a small fortune.
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