Two are seen as lottery leaders

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LOTCO and Camelot have emerged as leading contenders to win the licence to operate the National Lottery. The two are in a field of eight groups waiting to be informed on Wednesday about the outcome of the bid selection.

The 15 quoted British companies involved in the bidding face a week of volatile trading in their shares, because the contract could make a significant impact on their profits. The lottery, set up to raise funds for 'good causes', is expected to generate pounds 3bn in revenues a year. According to Smith New Court, the City broker, it could produce profits of pounds 75m a year for the winner.

'The potential enhancement to earnings for a member of the winning consortium is between 6 and 12 per cent but could be higher,' analyst Bruce Jones said.

The decision rests with Peter Davis, director-general of Oflot, the lottery watchdog, the only person who knows the identity of the winner.

Camelot, whose members include Racal Electronics, Cadbury Schweppes, security printer De La Rue and G-Tech, the US lottery operator, is thought to be leading the race by a nose.

But Lotco, led by the Rank Organisation, is making a late challenge and could emerge as the victor. Its co-partners are a group of City institutions whose names have not been revealed.

The UK Lottery Foundation, an early favourite fronted by Richard Branson, is regarded as the dark horse. The foundation, backed by Boots, Mars and IBM, was set up as a non- profit-making organisation.

Other contenders include Games for Good Causes, which is made up of Ladbrokes and MAI, the financial services and media company headed by Lord Hollick.

The Great British Lottery Company is backed by Vodafone, Granada, the television and rental shops combine, Hambros, the merchant bank, and Associated Newspapers, publisher of the Daily Mail.