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Last Updated: Tuesday, 7 August 2007, 11:35 GMT 12:35 UK
Lotto licence, little competition
By Robert Plummer
Business reporter, BBC News

National Lottery operator Camelot has faced a notable lack of heavyweight opposition in its latest bid to secure a further 10-year licence.

Camelot logo
Camelot now looks certain to clinch another 10-year licence

The company, which has run the lottery since its launch in November 1994, last had to defend its incumbency seven years ago, against Virgin boss Sir Richard Branson.

The process soon descended into chaos as the National Lottery Commission rejected both bids, but confusingly decided to proceed with Sir Richard's plan for a People's Lottery.

At the time, Camelot's image had been dented by revelations from its technical supplier, GTech, that a software problem had led to some winners being paid the wrong amounts.

Camelot aggressively pursued the matter in the High Court, forcing the Lottery Commission to back down from its original exclusion and winning a second chance.

At the end of a year of wrangling, the commission finally awarded the licence to Camelot in December 2000.

After that bitter battle, further fireworks might have been expected in the race for the lottery's third licence, starting in February 2009.

But Sir Richard, still licking his wounds from last time, decided not to repeat the experience and stayed out of contention.

Low-cost bid

The only rival bid to Camelot this time was a somewhat quixotic challenge from Sugal & Damani, an Indian conglomerate little known in the UK.

The Chennai-based company has a range of interests including stockbroking, property, information technology and tourism.

Dianne Thompson - Camelot chief executive
Dianne Thompson was "thrilled" Camelot had retained lottery rights

It operates lotteries in several Indian states, including Maharashtra, Punjab and West Bengal, but has no first-hand knowledge of the UK market.

Sugal & Damani's chairman, Sugalchand Jain, told the Times of India his firm had spent just 2,310 on preparing its bid document, which ran to 35,000 pages.

Camelot's document, in contrast, was a mere 18,000 pages long, although it spent a massive 20m on its proposal.

Sugal & Damani had apparently signed a partnership agreement in principle with an unnamed "large European bank" to provide expertise if the bid was awarded in its favour.

Its efforts did not go entirely unrecognised. It has now been named the "reserve bidder", which means it can be called upon to run the lottery if the commission cannot finalise a deal with Camelot.

But now that Camelot has been identified as the "preferred bidder", it looks practically certain that it will be given another lease as National Lottery operator later this month.

Unstoppable

It's a remarkable track record for a company that was one of eight initial bidders when John Major's government introduced the lottery in the 1990s.

Established as a consortium, Camelot's joint owners are now Cadbury Schweppes, Royal Mail, banknote printers De La Rue, Fujitsu Services and Thales Electronics.

HISTORIC LOTTERY MOMENTS
May 1994: Camelot wins first lottery licence
November 1994: First draw takes place
March 1995: Scratchcards are launched
June 2000: Lottery creates its 1,000th millionaire
December 2000: Camelot wins second lottery licence
December 2006: Lottery creates its 2,000th millionaire

From the start, it came under fire from those who thought it was making too much money - prompting even its chairman at the time, Sir George Russell, to admit that it was seen as "greedy".

But although Labour's 1997 manifesto suggested the lottery should be run by a non-profit operator, the terms of the licence were not changed when the party came to power.

Since then, Camelot has worked to put its "fat cat" reputation behind it. It now takes less than half a penny in profit from each 1 ticket.

The lottery's popularity reached a peak in the financial year 2001-02, when 75% of Britain's adult population took part.

But according to the most recent figures issued by Camelot, the lottery's reach is recovering after a dip, and now accounts for 69% of adults.

The firm's chief executive, Dianne Thompson, said she was "thrilled" that it had retained the lottery rights.

Camelot has now pledged to introduce new ways of parting the British public from their cash, including the world's first global lottery draw, following the 2004 launch of the Euro Millions prize.




SEE ALSO
Camelot gets nod for UK lottery
07 Aug 07 |  Business
Two bid to run national lottery
09 Feb 07 |  Business
Indian firm in bid to run Lotto
20 Aug 06 |  Business

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