Camelot threatens to sue over licence row

The Lottery operator Camelot has threatened to take fresh legal action against the game's regulator in its dispute over the next lottery licence, plunging relations between the organisations to a new low.

The Lottery operator Camelot has threatened to take fresh legal action against the game's regulator in its dispute over the next lottery licence, plunging relations between the organisations to a new low.

Camelot executives yesterday accused the National Lottery Commission of failing to prove it had accepted the full blame for illegally deciding to enter exclusive talks on the next licence with Sir Richard Branson. It also accused the commission of failing to give a full public apology for its actions, despite damning criticisms of its behaviour from Mr Justice Richards at the High Court earlier this month. As a result, Camelot was keeping open the possibility of further legal action if the commission failed to prove its good faith and again selected Sir Richard's bid after Camelot's revised bid was submitted on 24 October.

A Camelot spokeswoman said its chief executive designate, Diana Thompson, had written to the commission last Tuesday setting out those concerns but had yet to receive a reply. Instead, she claimed, the commission still appeared only to blame its legal advisers. "A 10 year old could've noticed that they were being unevenhanded in dealing with the process," she said. "We're still not happy and we haven't had a response yet to that letter."

Camelot was surprised that Dame Helena Shovelton, the commission's chairwoman, had not yet offered her resignation, she said.

A commission spokesman retorted angrily that the regulator had "bent over backwards" to prove its good faith after the court ruling. "We've reached an impasse," he said. "The only reason we're in this complicated mess is because of the failure of the two bids in the first place. We've done everything in our power to be fair, and we can show that."

He said the commission had started talks with Camelot three days earlier than the judge recommended and had asked Ms Thompson at their meeting last Tuesday to explain what she needed it to do to demonstrate its good faith.

It had effectively sacked its legal advisers, the Treasury Solicitors, and is to appoint the City law firm Freshfields, one of the top five in London, "so we have a fresh pair of eyes" on the decision-making process. He said Dame Helena had accepted publicly that the commission had been wrong.

He added that a public letter in which the commission set out its apology and proposed action to address the judge's concerns was being held by its legal advisers but would be released shortly.

The Camelot spokeswoman said that indications from Dame Helena, in an interview in Saturday's Independent, that the commission believed Camelot could still win were "heartening". She said: "If they're starting to take a more flexible approach we will probably be a bit more relaxed about it."