Culture Secretary set to defend National Lottery's monopoly

Tessa Jowell, the Culture Secretary, has capitulated to National Lottery providers Camelot, and will reject plans to allow charities and private companies to offer multi-million pound lottery jackpots.

The Independent on Sunday has learned that Ms Jowell will confirm on Tuesday that she has rejected proposals in Sir Alan Budd's gambling review to allow unlimited charitable lottery top prizes, after coming under intense pressure from chief executive of Camelot, Dianne Thompson to stifle the competition.

The lottery operator claimed that Budd's proposals would severely damage the National Lottery's income, and cost Camelot up to £1.2bn in lost revenue, including £950m in returns to good causes and Exchequer revenues.

Instead, charities will be allowed to double the maximum jackpots to £200,000 per game, up to a limit of £2m paid out each year. Their annual revenue limit will also be doubled to £10m. This could affect Camelot's income but, crucially, is set too low to be the "life-changing amount" that Camelot feared could severely damage the National Lottery.

Ms Jowell is also expected to reject Budd's proposal to allow commercial and private lotteries to be set up, after Camelot warned that national chains such as the Co-Op and Tescos would stage charitable lotteries with large prizes to raise funds for school and hospital equipment.

Camelot was also against Budd's proposals to allow Bingo halls to increase prizes. Now the industry is concerned that the Government has also capitulated on this issue, as it says Bingo and the National Lottery are competing.

"I am concerned that the DCMS (Department for Culture, Media and Sport) has a conflict of interest in regulating the commercial gambling industry and the National Lottery," said Sir Peter Fry, chairman of the Bingo Association. "It is in the Government's interest to protect the National Lottery so that money can go to worthy projects which otherwise the Government would have to finance."

Camelot, which has seen a 5 per cent decline in sales, is under intense pressure to improve its performance. And, in a speech at Southwark Cathedral last week, Ms Jowell said she accepted arguments that the National Lottery needed to be protected. "I won't be gambling with the future of the National Lottery," she said, adding: "It wouldn't be right to proceed with measures which would significantly harm the ability of the lottery to raise money for good causes."

The lottery operator still fears, however, that the DCMS will accept Budd's proposal to allow charities to sell lottery tickets in the same "territory" currently reserved for Camelot, such as shops, supermarkets and post offices.

This could allow supermarkets to sponsor a lottery within their stores, effectively competing with National Lottery sales. Camelot said this was also unwelcome.