Camelot had beaten its rival bidders, led by Richard Branson, and had won the rights to milk the money cow. But since then Camelot has staggered from one publicity disaster to the next - many of them caused by Mr Branson, who has refused to take his defeat lying down.
The real problems for Camelot, then part-run by the American lottery specialist GTech, began in December 1995, when a critical BBC Panorama programme coincided with a Westminster select committee interrogation of the Lottery'sregulator, Peter Davis of Oflot.
The star interviewee of the Panorama programme, Mr Branson, claimed that Guy Snowden, the chief executive officer of GTech, had offered him a bribe aimed, said Mr Branson, for him to stay out of the race for the lottery licence.
Meanwhile Mr Davis admitted to MPs that he, and his deputy, had accepted free flights on GTech corporate jets during a visit to America in October 1994. Mr Davis further admitted to staying at the home of a GTech director.
Mr Snowden took the plunge and issued a libel writ against Branson - a risky venture, given Mr Branson's public popularity at the time. He characteristically went for a heavy counter-attack, issuing a writ against Mr Snowden.
In February of this year the case came to court. The result of the contest between the plausible and suave Mr Branson, 47, and the overweight Mr Snowden, 53, who looked like a bit player in Goodfellas, was fairly predictable. Mr Snowden was sensationally ousted by Mr Branson and left to pick up an estimated pounds 2m bill for legal costs when a jury decided he did try to bribe the Virgin tycoon.
In true Branson style, everyone's favourite tycoon celebrated with champagne and he announced that all his pounds 100,000 libel damages against the American lottery magnate would go to charity. He declared: "We said from the outset that we would place our trust in the judgment of a jury where all the evidence surrounding these events would be heard in public and under oath."
The heritage minister, Chris Smith, and Mr Davis demanded Mr Snowden's resignation immediately after the High Court verdict. Within minutes, he said he was quitting. Outside court Mr Snowden said: "I think that probably standing down from the Camelot board is the right thing to do at this point."
In the fallout, Mr Davis, the largely discredited Oflot chief, was required to fall on his sword by Mr Smith.
The lottery has become a personal issue with Branson, and he is determined to get the concession. He has even offered to run it so all the profits go to charity. He claims: "The lottery is a licence to print money. One of the interesting facts to emerge from the case was that those running the lottery are extracting a billion pounds in profits both as shareholders and suppliers to it - a billion that could have gone to charity."
Now Mr Branson's magic touch looks rather more tainted than it did two years ago. His attempts to balloon round the world failed. Virgin's venture into railways has been nothing short of a publicity disaster - Virgin features as the most unreliable service. The lottery contract comes up again in 2001, and it is likely that Mr Branson will bid again.Reuse content