Camelot may have to share lottery rights

Camelot faces losing exclusive control of the National Lottery under sweeping reforms to be considered by Tessa Jowell, Secretary of State for Culture.

She is expected to unveil proposals in the House of Commons this week for a major overhaul of the rules governing the game and powers of its regulator, the National Lottery Commission.

It could mean that several companies will be allowed to run lottery games, that the commission's powers to block new games are greatly weakened or even that the game be "nationalised" by giving control to the commission.

The suggested reforms follow the bitter row 18 months ago between Camelot and Sir Richard Branson over the commission's botched decision to give the billionaire businessman control of the National Lottery.

Alongside the controversy, which culminated in the High Court overturning the Branson decision, has come a serious fall in lottery sales and returns to good causes, down by 3 per cent last year.

Camelot's attempted relaunch of the Lottery last month is in increasing trouble. It has offered four free jackpot prizes worth £22m but only raised an extra £12m in sales since early May. Last week's National Lottery sales were particularly poor as the game clashed with England's World Cup match against Denmark. Ms Jowell will unveil further proposals early next month to overhaul the spending of lottery money, which have been bedevilled by rows over high prestige projects such as the £13m grant to buy Winston Churchill's private papers, the £120m spent on the new Wembley stadium, the £658m given to the Millennium Dome and the £78m to rebuild Covent Garden Opera House.

The minister will consider heavily cutting the number of lottery funding bodies from the present 15, which include the Film Council, the Arts Councils, and the UK Sports Council, to fewer than five. Instead she favours bodies like the Community Fund and the New Opportunities Fund that give money to grassroots initiatives.

Lottery funders will be told to cut the bureaucracy in applying for small grants, to introduce local referendums on where and how to spend lottery money, and relax the rules for potentially risky community projects.

And, under mounting pressure from campaigners, she will also remind the lottery funding bodies that they must cut their huge reserve funds, now at £3.5bn, by half by 2004.

Ms Jowell is thought to be cautious about agreeing to dramatic reforms and open-minded about which various options to choose. But she is under intense pressure from Camelot to give it greater freedom to introduce adventurous new games to boost sales.