National Lottery: Why the bids failed

Camelot looks like losing the lottery

The National Lottery Commission, established under the 1998 National Lottery Act, decides who wins the next seven-year franchise.

It assessed the bids from Camelot, the current franchise holder, and the People's Lottery, led by Virgin tycoon Sir Richard Branson, on the following three criteria:

The amount raised for good causes

The "integrity" of the bid

The protection of players' interests

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Good Causes

The amount raised for good causes is at the centre of the purpose of the National Lottery.

Each of the two bids made detailed predictions of how much could be made on the basis of continuing the existing National Lottery draw in some shape or form and expanding the game into new areas.

Both bids had many merits. We gave them every chance to make improvements. But they also had important failings

National Lottery Commission

The People's Lottery predicted in its submission it would be able to raise £15bn for good causes during the lifetime of its licence.

It stressed that unlike the current holder, Camelot, the consortium would not be taking profits after costs, something it says would increase the amount available for both prize money and good causes.

Camelot made profits of £230m over the lifetime of its licence and distributed around £8bn to good causes in just under six years of operations.

It had also promised to take less of a profit under a new licence.

Speaking in Parliament in 1997, Culture Secretary Chris Smith said his preference was for a "competitive and efficient not-for-profit operator".

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Integrity

The legislation states bidders and their key suppliers should be "fit and proper" persons.

Camelot's profits and bonuses to directors have been heavily criticised in sections of the media.

Guy Snowden: Lost case against Sir Richard Branson

The company's new chief executive accepted a salary of £330,000 - £150,000 lower than her predecessors.

But the greatest controversy around the Camelot consortium has been linked to its main supplier of the technology, G-Tech.

That reached a height when Sir Richard alleged the former chairman of GTech, Guy Snowden, attempted to bribe him to withdraw from the race in 1993.

The Virgin group boss won the subsequent libel action and GTech was forced to give up its holding in Camelot.

The lottery regulator Peter Davis also resigned after it was revealed that he accepted hospitality from the company.

National Lottery Commission chair Dame Helena Shovelton said: "Camelot's relationship with GTech, the US lottery company which provides terminals and equipment, is the reason its bid was rejected.

"It was ruled out because the commission felt problems with the GTech software had not been resolved."

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Players' interests

The commission has rejected the People's Lottery bid because of issues surrounding the protection of player's interests - but Sir Richard's consortium has been given further time to respond.

The regulations protecting the players' interests are complicated.

People's Lottery: Must resolve customer issues

They cover everything from what should appear on a ticket to the provision of free counselling to winners and bilingual information in Wales.

But one of the most complex issue is what they would do if a draw is cancelled or declared void for whatever reason.

The People's Lottery has to prove it has a system in place to ensure that, if required, every one of the millions of ticket holders throughout the country, can be refunded.

Furthermore, the People's Lottery has confirmed it inserted a number of legal conditions in its application covering the procedures for transferring takings from retailers to the trust accounts to winners.

It says it intended to resolve these legal matters before the beginning of the licence in October 2001 but accepts it will have to do so within four weeks.

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