FORGET POLITICS, THE EUROPEAN UNION or even that perennial British conversational stopgap, the weather. These days it's the lottery that is obsessing the nation, not only fueling dreams of instant wealth for the millions of weekly punters but also provoking lofty editorials, angering the clergy, exciting politicians and generally causing more controversy than the relationships of the royals.

Sheer novelty is part of the explanation. Though state-run lotteries have existed fuss-free in most of the rest of Europe for decades, Britain only recently repealed an 1826 parliamentary ban on this type of gambling. The first draw was held on Nov. 18, 1994, and since then each week some 30 million Britons--3 out of 4 households--have spent an average $155 million on instant-lottery scratch cards and the main weekly draw, making Britain's lottery one of the world's biggest in terms of sales. Although the top prize for a winning "instant" is only $77,500, the main draw has so far created 132 new millionaires and raised expectations among the 13 million or so viewers who tune in to the BBC on Saturday nights to see the winning numbers.

But expectations are also behind the lottery's problems. Although 50% of the money wagered goes back to the punters in the form of winnings, 28% of the take is earmarked for worthy causes in five specific categories: the arts, sports, charities, national heritage and the millennium celebration fund. Trouble is, one Briton's worthy cause is another's waste of money. When the Royal Opera House in London's Covent Garden received $85 million through the Arts Council Lottery Fund, there were howls of protest about subsidies for elite entertainment. The same happened last month when the fund awarded $47 million to the Sadler's Wells ballet company, earning a tabloid rebuke headlined IT'S TUTU MUCH. Trying to benefit the poor has raised hackles too. When $1 million was allotted to Scotland's Strathclyde Poverty Alliance, which campaigns among other things for the restoration of welfare benefits to 16- to 18-year-olds, Tory M.P.s railed about political correctness in choosing charities concerned with single-issue politics.

No one can agree on who should get what. Those outside London grumble that London is overfavored; the animal charities that they are overlooked. For her part, lottery devotee Nora Roberts, 62, a retired London garment worker, believes that none of the charities chosen thus far should be recipients. She prefers beneficiaries who have been overlooked. "The working classes play the lottery, and I think the money should go to hospitals and nurses," she says firmly.

In fact, it's not just the working classes that play the lottery, and therein lies another complaint. Britain's charities, far from being delighted at this new source of income, claim that donations are down an overall 6% because loose change in just about everyone's pockets and purses now goes into the lottery rather than into collection boxes or to buy raffle tickets. Says Mrs. Gillian Greenwood of Alexandra Rose Day, an umbrella body for some 1,000 small charities: "Since the lottery, we've seen a 38% drop in ticket sales for our national draw and a 12% fall in our Flag Day street collections." Joining the complaint chorus are betting firms, amusement arcades and movie theaters, all of whom insist that the nation's new obsession has cut heavily into their earnings. As a national punching bag, the British lottery really has no equal. Last week Lloyds Bank blamed it for distorting the entire country's economic statistics. Lottery-ticket spending is excluded from retail-sales figures but included in consumer spending. So, argues the bank, the lottery may well explain a mysterious discrepancy: although people are spending more money, retail sales are so flat that annual retail growth has dropped from 3% to near zero.

Neither are the churches amused. "Many vulnerable and desperate people are being induced to spend money on the lottery they cannot afford," warned a joint statement last month from the Roman Catholic, Anglican, Methodist and Scottish churches. Although average weekly spending per household, at $3.60, is low by European standards, the church leaders expressed a concern that many share. But that has not stopped the various churches from filing 267 applications for $31 million of lottery money to restore their crumbling architecture.

With all the flak flying, it might seem that the only Britons the lottery makes truly happy are the winners and their families. Not a bit of it. When Mark Gardiner, 33, a glazier, won $17.7 million in June, his third wife vowed to sue him for every penny, his adoptive mother said she hoped he would drink himself to death on the money, and one of his former wives demanded half his winnings. After winning $2.2 million in September, Ken Pattison, 42, complained to the newspapers, "Life is such a drag now that I can afford anything I want." The saddest case of all is that of tool inspector Timothy O'Brien, 51, a father of two who thought that he and his friend lost a $3 million jackpot in April because he had forgotten to buy their regular ticket. He wrote a note saying, "Steve, I forgot to put the numbers on. Sorry. Tim." Then he shot himself. But as the luck of the lottery would have it, their numbers did not hit the jackpot combination and would have won them only $85.