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Thursday, 24 August, 2000, 03:05 GMT 04:05 UK
Q&A: Lottery bid decision
The National Lottery Commission, has rejected bids from both Camelot and Sir Richard Branson's non-profit making People's Lottery, saying there were faults with each package of proposals.

The commission is to start exclusive talks with Sir Richard during the coming weeks, suggesting he is in prime position to win the licence.

The BBC's Media Correspondent, Nick Higham, looks at the bids and what will happen now.

In essence, why did the two bids fail?

  • Camelot's bid failed because the National Lottery Commission is unhappy with the company's main supplier of lottery terminals and software, GTech. In June 1998 GTech discovered a glitch in its software which had affected some prize pay-outs. It corrected the glitch, but did not disclose the problem to Camelot. The commission is highly critical of that lack of openness. Unable to give GTech a clean bill of health - and given that GTech is Camelot's key supplier - the commission decided it could not be sure a new Camelot lottery would be run "with all due propriety".

  • The People's Lottery bid failed because the commission thought the company might run into financial difficulties if it sold fewer tickets than predicted. The commission wanted unconditional guarantees that if this happened 50m would be available to ensure all prizes were paid; the People's Lottery gave the guarantees - but with conditions. The People's Lottery has now been given a month to come up with guarantees which satisfy the commission.

    Which bid came closest to success?

    The People's Lottery came closest to success. The commission thought both bidders' predictions of likely ticket sales were over-optimistic, and that neither could therefore hit their target of raising 15bn for good causes over seven years. But at comparable levels of ticket sales it said the People's Lottery's plans generated more for good causes than Camelot's. What's more, while the question-marks over GTech have ruled Camelot out completely, the commission evidently believes the problems with the People's Lottery bid can be resolved.

    Can either bid be resubmitted?

    No, the commission has declared the original application process at an end. The negotiations with the People's Lottery are part of a new process which the commission's lawyers have advised is permitted under the law. Camelot believes that decision is unfair - that the People's Lottery has effectively been given an opportunity to improve its bid which Camelot has been denied - and may well decide to challenge the decision in the courts.

    Are there any other bidders waiting in the wings?


    How will the lottery contract be awarded?

    If the People's Lottery can satisfy the commission within a month that the company's financial arrangements will protect players and prize pay-outs, then it will be awarded the licence and will have until October 2001 to get it up and running. If that doesn't happen, the commission says it will wash its hands of the problem and hand it over to the government to sort out. It's just conceivable in those circumstances that Camelot may be awarded a new licence, or have its existing licence extended.

    If its bid has been rejected, why is Camelot being allowed to run the lottery until next year?

    Because its licence runs until next October. The commission denies that branding Camelot unfit to run the lottery for another seven years implies that they are also unfit to run it now. But the commission still has not completed an inquiry into the GTech software glitch, and will not complete it until November.

    Is public confidence in the lottery likely to be shaken?

    There is a danger that public confidence in the lottery in general and Camelot in particular will be shaken - and that could have an effect on ticket sales and on the amounts raised for good causes between now and next October.

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    23 Aug 00 | Business
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