Losing faith in Camelot

The national lottery was launched in 1994

In a surprise announcement the lottery commission has dismissed both bids for the lottery at this stage - but pledged to work with Sir Richard Branson's Peoples' Lottery to try and reach an agreement.

Despite being the favourite to win, Camelot, the company that has been running the UK lottery since it began in 1994, has had its bid effectively rejected.

One of the reasons given by the commission for its loss of faith in Camelot was the fact that a computer glitch had led to many winners being paid the wrong amounts.

Court case

GTech, the US company which supplies all the computer software, hardware and technical expertise for the national lottery, has been at the centre of several controversies involving Camelot in the past six years.

In 1996 - two years after Camelot won the bid to run the lottery, Sir Richard Branson sensationally alleged the former chairman of Camelot's partner GTech, Guy Snowden, had tried to bribe him to withdraw from the race in 1993.

It ended up in a damaging court case in 1998 when Sir Richard and GTech sue each other for libel, with the Virgin boss emerging the victor.

Corruption

GTech was also hit by a string of corruption allegations, involving staff or former staff in the US. It was forced to give up its shareholding in Camelot - but continues to supply the game systems and services

Peter Davis, the Oflot regulator, was also forced to resign after it was revealed that he accepted free flights at the expense of GTech's Guy Snowdon.

In an effort to restore public faith in the regulation of the national lottery, a five strong lottery commission was brought in under the 1998 National Lottery Act to replace him.

Software glitch

In February this year Camelot announced the details of its bid to renew its lottery licence in the city of London. It campaigned with the slogan: "Only leave one thing to chance".

The group - who have always maintained that profit alone is not the issue - stressed their efficiency and credibility.

But in June this year there were the embarrassing revelations that a fault in the GTech software had led to thousands of people being overpaid or underpaid between 1994 and 1998.

The glitch caused duplicate transactions to be recorded on the lottery terminals, with only a single ticket being produced.

This resulted in an overcharge to retailers and, if the ticket were a prize-winner, distortion errors in the distribution of the prize money.

GTech secretly identified and corrected the fault in 1998 without informing Camelot or, the then UK lottery regulator, Oflot.

When the affair was revealed a number of top US GTech executives were forced to resign.

This glitch came to light in the UK just as regulators began to seriously assess the bids for the new lottery contract.

When announcing its decision to reject both bids the Commission said the national lottery software problem had "seriously shaken the commission's confidence in GTech as a supplier to Camelot."