Camelot buys GTech UK and seeks to bid again for Lottery

The lottery operator, Camelot, has challenged the lottery regulator to reopen talks on bidding for the next licence after agreeing to buy its troubled software supplier for more than £100m.

The lottery operator, Camelot, has challenged the lottery regulator to reopen talks on bidding for the next licence after agreeing to buy its troubled software supplier for more than £100m.

Camelot confirmed yesterday that it is close to completing its buyout of GTech UK, whose close involvement in running the National Lottery led the National Lottery Commission to remove Camelot from bidding for the next seven-year licence last month.

The commission shocked Camelot by stating it had serious concerns about GTech's trustworthiness after its senior executives covered up a four-year software defect that affected about 113,000 lottery prizes. As a result, it said it would enter exclusive talks with Sir Richard Branson's The People's Lottery on taking over the next licence.

Camelot, which faces heavy fines for the cover-up, is agreeing a deal worth more than £100m to buy GTech UK's 24,000 lottery terminals, computer system and specialised lottery software, and take on its 70 staff. The deal, due to be completed by the end of this month, includes a large up-front sum and a yearly licence fee to GTech's American parent company for each of the seven years of the next licence. Camelot now pays GTech £28m a year for its services.

The lottery operator is challenging the commission's decision at the High Court in two weeks' time. Dianne Thompson, Camelot's chief executivedesignate, said yesterday Camelot had told the commission in writing it could now meet its concerns, but had received no response. Buying GTech UK was a "watertight solution" to its criticisms.

However, the commission insisted it would defend its action in court. "We have not heard anything from Camelot which makes us think that the course of action we are following is not the right one," a spokesman said.