Labour could 'nationalise' Lottery

THE National Lottery could be taken over by the Government in response to a slump in ticket sales. The move, which would amount to the Lottery being nationalised, will be revealed by Culture Secretary Tessa Jowell on Thursday. It comes after ticket sales suffered their largest ever fall last year.

However, any attempt to take over the Lottery would spark controversy given New Labour's record in running major projects such as the Millennium Dome.

The proposals will be spelled out in a report on the future of the draw, recently renamed The Lotto in a bid to boost sales. Jowell aims to avoid the fiasco of the battle between Camelot and Sir Richard Branson 18 months ago. She will outline three options when Camelot's seven-year licence runs out in January 2009.

The first would effectively nationalise the game by placing it in the hands of the Lottery Commission, the game's regulator, whose five members are appointed by Jowell. It would then negotiate contracts with companies to run various parts of the Lottery.

A second option would see Camelot lose its exclusive rights to run the game. Other companies would bid to run new games using Camelot's existing network of machines. The final option would leave the system unchanged with a single company awarded an exclusive contract.

Jowell will also outline plans to simplify the bidding process for the next licence in 2009. Her proposals will include allowing bidders to claw back some of the costs of making a bid from the Lottery itself and extending licences beyond seven years.

She wants to avoid a rerun of the acrimonious contest between Camelot and Branson in which the commission originally decided to negotiate solely with the Virgin boss but was forced into an about-turn by the High Court. Branson then threatened legal action when the Commission awarded the licence to Camelot.

'I think everyone accepts the system was less than perfect and we want to come up with a better way to handle this,' said one official.

Camelot's credibility has been undermined by the fall in ticket sales. Six years ago, the Lottery was making more than £70m a week in sales but this has dropped to around £43m in recent weeks while sales fell by 4.1%last year.

Camelot's chief executive Dianne Thompson told MPs on Tuesday that sales had been dented by recent bank holidays, the Queen Mother's funeral and the Golden Jubilee.

Next week, Jowell is also expected to unveil an overhaul of Lottery money distribution. She wants to cut the existing 15 bodies which hand out cash to good causes to as few as five.