The winners: pounds 1.5m a week for Camelot

CAMELOT, the National Lottery organisers, made more than pounds 1.5m a week last year, despite falling scratchcard sales and the "disappointing" launch of the TV Dreams television game.

Announcing its annual results yesterday, the group repeated its claim to be "the world's most efficient lottery operator" as it tried to defuse criticism of further pay rises to its executive directors and a pounds 10m increase in pre-tax profits.

Last year, directors received 40 per cent pay rises after lower contributions to good causes, falling ticket sales and decreased profits. This year, the operator trumpeted a record "jackpot" for good causes and directors received a pay increase of, on average, 1 per cent.

It was not all good news for Camelot, however. Although ticket sales hit an all-time high of pounds 5.5bn, largely due to the success of the midweek draw, the public is less enamoured of the scratchcards with sales of National Lottery Instants falling by more than pounds 75m.

A further blow came from the launch of the TV Dreams game in February. The tickets for the game are tied in to the BBC's troubled Saturday night show The National Lottery Big Ticket which has been criticised as being both over-commercial and of poor quality. Camelot admitted yesterday that the pounds 20m sales have been "disappointing".

Camelot finance director Peter Murphy blamed the rules of the TV Dreams game, which will end next month. He explained: "The game is probably more complex than it needs to be. We are doing research into why it hasn't been as successful as we expected." He said Camelot would also try to increase sales of the Instants scratchcards.

Camelot emphasised it paid out pounds 1.6bn to good causes and pounds 708m to the Government in the year ending 31 March 1998. Justifying profits of pounds 80.9m before tax, Camelot said these still represented less than 1p in every pound spent on the lottery.

Mr Murphy said high rewards are justified: "There are not many businesses where you can say the UK is the world leader." The directors' bonuses will be significantly lower next year, he added, when the three-year incentive plan ends. Instead, staff will receive a loyalty bonus, based on the length of the notice period in their contracts, to stay on until the end of Camelot's licence to run the lottery - in September 2001.

Mr Murphy was confident that yesterday's results put the group on track to have its licence renewed.

"If the key is maximising the returns to the good causes, then we will stand on our track record. The Government has to decide whether it is more important to have a non-profit-making operator, or to maximise returns to the good causes."