It could be him: Desmond faces Lotto reckoning

Health Lottery mogul plots move into scratch cards – if he beats angry Camelot's court challenge today

Richard Desmond's controversial Health Lottery is planning an expansion programme into midweek draws and scratch cards if it survives a legal challenge today by the company behind the National Lottery.

Camelot Group, which has been running the National Lottery for the past 18 years, hopes to close down the Health Lottery which it claims is costing it £1m a week. The National Lottery operator is seeking a judicial review of the Gambling Commission's position that the Health Lottery – which is run by Mr Desmond's Northern & Shell publishing empire – is lawful, claiming that it was never the Government's intention to allow another nationwide draw.

Camelot argues that if the Health Lottery, which has been running for 10 months, is allowed to continue as a national operation it will create a precedent that will subject the National Lottery to an avalanche of competition.

"This could encourage numerous other commercial operators, such as supermarkets, broadcasters, international gambling companies or mobile phone operators, to set up similar mass-market lotteries as direct rivals to the National Lottery – with potentially devastating consequences for National Lottery Good Causes and Lottery Duty revenues to the Exchequer," said a Camelot spokesman.

Martin Hall, who Mr Desmond appointed to oversee his lottery, told The Independent he was confident that Camelot's challenge would fail and that the Health Lottery would expand further in order to meet its "ambitious" targets.

When Mr Desmond launched the venture last year, it was said that the Health Lottery would produce £50m a year for good causes. Mr Hall admitted that the project – which supports a network of 51 society lotteries around the country – had only generated £21m so far and would deliver only £30m in its first 12 months. Critics note that the lottery donates only the minimum of 20.3p in the pound to good causes, compared to the 28p paid by Camelot.

But Mr Hall challenged the suggestion that the Health Lottery was having a negative impact on the National Lottery and claimed it had actually helped to improve the performance of Camelot's operation by stimulating the market. In the year to 31 March, the National Lottery generated sales of £6.5bn, up 12 per cent on the previous year. "We've woken up the number one [lottery] and reinvigorated them," claimed Mr Hall. He said that £30m raised for good causes was a strong result in difficult economic conditions and claimed it would raise £50m in future years.

He said the Health Lottery was hoping to expand. "We could conduct the draw more frequently," he said. "We could look to offer different types of game into the market place for consumers, there is a very large scratchcard industry out there. There are lots of options for us to look at in terms of raising money for good causes."

Mr Hall said he was not surprised by what he described as a commercially driven challenge by Camelot, which he noted was answerable to Canadian shareholders.

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