Branson confident of winning lottery

Sir Richard Branson: confident he can "bridge the gap"

Entrepreneur Sir Richard Branson is confident he will be able to pull off talks to win the licence to run the National Lottery.

Speaking shortly after flying to London on Thursday, after his return from the Caribbean was delayed by a hurricane, Sir Richard predicted that his People's Lottery consortium would be able to meet remaining reservations to its business plan.

The National Lottery Commission (NLC) on Wednesday rejected bids entered by both Sir Richard's consortium and Camelot, the lottery's current operators, to run the lottery from October 2001.

But the commission gave the People's Lottery a one month deadline to improve its offer.

Sir Richard told BBC News 24: "Having come this far I would be surprised if we could not somehow bridge the gap."

Morning meetings

Sir Richard, who said he was as yet unaware of the detail of the NLC's objections, declined to comment on how the People's Lottery might improve its offer ahead of internal meetings today.

Dame Helena Shovelton, who is set to meet Sir Richard tomorrow

But he said: "They [the NLC] are happy with the principal points. That we will raise a lot more money for good causes than Camelot would have done.

"That the odds of becoming a millionaire are going to be much greater playing the People's Lottery than Camelot's."

Sir Richard, the multi-millionaire head of the Virgin business empire, is set to meet NLC chair Dame Helena Shovelton tomorrow to begin negotiations.

"I will find out exactly what it is we have to do and spend the next month ticking off all the boxes," Sir Richard said. "I hope to create a lottery which will still be around in 100 years time. So a handful of weeks is worth waiting for."

Hope for Camelot staff

He also threw a lifeline to Camelot's 800 staff, facing redundancy following yesterday's decision.

"Many innocent people will be jobless," he told reporters. "We hope to take on many of those workers at the People's Lottery."

The most fundamental thing that will change is that 100% of profits go to good causes

Sir Richard Branson

The People's Lottery has pledged to put all profits from the lottery to good causes, rather than taking a cut as Camelot does at present.

"The most fundamental thing that will change is that 100% of profits go to good causes," Sir Richard said.

NLC documents released yesterday showed the commission was concerned about the consortium's emergency provisions should lottery takings fall below forecasts.

Concerns over viability

Commission members had "significant concerns about the financial viability of the People's Lottery in lower revenue scenarios," the NLC said. The People's Lottery earlier this summer withdrew an offer of setting up a £50 million emergency cash pot.

The commission had significant concerns about the financial viability of the People's Lottery in lower revenue scenarios

National Lottery Commission

Arrangements for reimbursing lottery players in case a draw was not held were "so conditional and uncertain that they were not capable of acceptance".

Forecasts by both People's Lottery and Camelot of a rise in takings of more than 40% were "unduly optimistic", the NLC said.

Ticket sales in the lottery have dipped as the lottery matures, with income levelling out at £82.5m a week, and sales of scratchcards at between £9m and £11m.

"Integrity compromised"

Camelot's bid was also criticised for its reliance on the troubled technology firm GTECH for supplying gaming systems.

NLC investigators earlier this year unearthed a GTECH cover up in which the firm repaired a software fault, which saw lottery outlets overcharged and winners overpaid, "secretly, in breach of established software changes control procedures".

Camelot's Tim Holley: Unhappy about the commission's action

"The integrity of the lottery was compromised," the commission said. "The commission remains extremely concerned about the behaviour of GTECH."

Camelot - owned by Cadbury Schweppes, De La Rue and Racal - had originally been widely tipped as favourite to win the new lottery contract, given the consortium's record of efficiency and technical competence. It is backed by the Post Office.

Camelot said on Thursday it had "nothing to add" to a statement yesterday by chief executive Tim Holley expressing surprise that the NLC had not reached a final decision after six months of negotiations, and that only the People's Lottery had been given extra time to improve its bid.

"The situation appears to us to be far from clear, which is very unsatisfactory for all our staff and retailers," Mr Holley said.

Last year Camelot turned over more than £5bn, and raised more than £1.4bn for good causes and a further £611m for the government in tax.