Camelot, the UK's outgoing National Lottery operator, revealed a drop in sales of tickets and instant win games as it noted players tightened their belts in the face of escalating costs of living.
Lottery sales dropped 3% to £8.1bn during the year to March 31, primarily due to a 7% decline in sales of National Lottery Instants to £3.4bn.
There was increased competition for people's attention and money after Covid restrictions ended, the group said.
As consumers became cost-conscious due to rising costs, instant sales were held back by a "growing economic uncertainty," while scratch card sales were lower than before the pandemic, the firm said.
National Lottery sales fell 4% to £4.7bn across 44,500 retailers.
Initially, the pandemic restrictions were to blame, but more recently "consumers tightened their belts" as their budgets were squeezed, said the firm which has nearly 60% sales generated through retailers.
Camelot lost its lottery licence this March to rival Allwyn Entertainment after 30 years of running the game and recently launched legal action against the Gambling Commission.
Previously known as Sazka, Allwyn runs lotteries in Austria, Italy, and Greece, and plans to reduce the price of UK tickets from £2 to £1.