Improved returns will boost bid by Camelot

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The lottery operator Camelot now has a chance to win the next lottery licence after a judge ordered that the National Lottery Commission reconsider its bid, the commission has indicated.

The lottery operator Camelot now has a chance to win the next lottery licence after a judge ordered that the National Lottery Commission reconsider its bid, the commission has indicated.

Dame Helena Shovelton, who chairs the commission, said Camelot could now beat the bid from Sir Richard Branson's People's Lottery if it improved returns for good causes.

Her remarks came after Jack Straw, the Home Secretary, said the commissioners should consider resigning after a High Court judgment forced the commission to abandon its exclusive talks with the People's Lottery on securing the game's licence next year.

On BBC 1's Question Time on Thursday, the Home Secretary said the court's decision put the commissioners "on notice" and they now had to ensure that their handling of the process to find the next lottery operator was flawless.

In a judgment earlier this month, Mr Justice Richards said the commission was "conspicuously unfair" and "abusing its powers" in denying Camelot a second chance to address significant concerns about the trustworthiness of its software supplier, GTech.

He ordered the commission to give Camelot a month, ending on 24 October, to tackle those criticisms and resubmit its bid.

Mr Straw, breaking the silence by ministers on the affair, said: "These are serious criticisms and, if they were to have been made of me, I would not necessarily have resigned, but I certainly would have considered my position ... The commission are on notice. They have to get the process and the judgement exactly right for the future."

In an interview with The Independent yesterday, Dame Helena said: "All of us have taken to heart what has been said." But, she added, the judge had also said that the commissioners acted with the best intentions. "We're absolutely determined that the negotiations will be fair," she said.

Dame Helena, who is also chairwoman of the Audit Commission, said it would be irresponsible to resign "at this moment". She said: "We can't see what it would solve because the court has given us this task to do. The big question is how to get somebody appointed to run the lottery. If we go, we sort of create a vacuum."

She said the commission had abandoned its position at the High Court that the People's Lottery would probably have won the licence, regardless of the GTech issue, as it promised a higher rate of return for the National Lottery Distribution Fund. Both bidders claimed they could raise £15bn for good causes, although the commission said this was over-optimistic.

The economics of both bids may now have changed. The People's Lottery's backers has had to find a £50m guaranteed fund to protect lottery proceeds, and Camelot is buying GTech's UK operations.They will not, however, be allowed to rewrite their entire bids. "When they change the bids in their different respects, this will have knock-on effects [which] may or may not impact on the return to good causes," Dame Helena said. "It may be that these go down in both cases. It may be that one goes up and one goes down."

Dame Helena said the commission was also looking for legal advisers to replace the Treasury Solicitors, whose advice led the commission to believe it could legally reject Camelot's proposals. This was partly to reassure Camelot of its good faith.

She said the Government should consider changing the laws governing the National Lottery and the commission's work, particularly the rule covering the "extraordinarily difficult" process of judging a competition between an incumbent lottery operator and a rival bidder.