Rival bidders both rejected for Britain's national lottery contract

Britain's Lottery Commission has rejected both bidders who applied to run the country's lucrative national lottery. But one of the two - the People's Lottery consortium led by entrepreneur Sir Richard Branson - was invited to enter a second round of bidding.

Britain's Lottery Commission has rejected both bidders who applied to run the country's lucrative national lottery. But one of the two - the People's Lottery consortium led by entrepreneur Sir Richard Branson - was invited to enter a second round of bidding.

"Both bids have many merits," said Dame Helena Shovelton, the Lottery Commission's chairwoman. "But they also had important failings."

Up for grabs is the chance to run the National Lottery, which has sold tickets worth 28 billion pounds (dlrs 42 billion) since it was launched in 1994. The successful bidder will take over after the seven-year license granted to Camelot expires in October 2001.

Camelot's bid was rejected because of continuing problems with software supplied by the U.S.-based lottery operator GTECH, Shovelton said.

GTECH, which owns a 22 percent stake in Camelot, also has been at the center of corruption allegations over its contracts. In 1998, Branson won a libel case against former GTECH chairman Guy Snowden, whom he accused of attempting to bribe him into dropping an earlier lottery bid.

The People's Lottery bid suffered from "legal uncertainties" over the process of refunding players if a draw was voided, Shovelton said.

Nonetheless, the commission said it would now enter into one-on-one negotiations with the group led by Virgin tycoon Branson.

"If for some reason the negotiations with the People's Lottery fail in the course of the next month, then at that stage we will discuss with the government what steps to take next," she said. "I will rule nothing out. Camelot is not ruled out."

The lottery has generated more than 8.8 billion pounds (dlrs 17.6 billion) for arts, community and charitable groups. But Camelot has been criticized for profits that reached 70 million pounds (dlrs 105 million) a year, fat executive bonuses and the way money was distributed.

Both the Camelot and People's Lottery bids promised to raise more than 15 billion pounds (dlrs 22.5 billion) for good causes.