US dispute casts shadow over Camelot's lottery triumph

MORE THAN a quarter of a million people a week are expected to win prizes ranging from pounds 10 up to pounds 5m when the National Lottery starts in November. But the jackpot could be as much as pounds 15m, since if there is no outright winner it will be carried forward for up to three weeks.

Camelot, the consortium chosen yesterday from eight applicants to run the lottery, says it will pay out in prizes almost half the pounds 32bn it expects to generate in sales during the seven years for which it will be granted its operating licence.

Camelot's shareholders, the sweet-maker Cadbury Schweppes, the security printer De La Rue, the communications group Racal, the US lottery operator G- Tech and the computer group ICL, have put up pounds 50m to cover start-up expenses.

But last night it emerged that G-Tech was sharply criticised over its charges in an official report last year. The report by the Kentucky state auditor, leaked to the Independent, raises questions whether G-Tech - the world's leading hi-tech lottery specialist - provides value for money. The company earns dollars 6.5m (pounds 4.3m) a year from the Kentucky lottery which sells dollars 500m worth of tickets annually.

Albert Chandler, the state auditor, says in the report that the 'percentage of Kentucky Lottery Corporation (the company that formally runs the lottery and retains G-Tech) net revenues. . . has been substantially below the goal established.'

Payments to G-Tech were made without a formal contract and they were not sufficiently detailed, so checking them proved difficult. 'All payments to G-Tech should be reviewed to determine what KLC is receiving for its fees,' said Mr Chandler. 'In addition we recommend comparison of the G-Tech fees to other comparably sized state lotteries.'

Mr Chandler concludes: 'Because of the magnitude of this contract (over pounds 17m), we believe that a performance evaluation should have been and should be performed.'

Craig Watson, a vice-president of G-Tech, said last night the company believed its prices were competitive. Clearly someone was playing 'dirty tricks' by leaking the Kentucky report, he said.

Camelot had been widely tipped in the City as the winner. It beat the bookmaker's and populist favourite, Richard Branson's UK Lottery Foundation, which had promised that if it won it would give all the profits generated by the lottery to charity.