Lottery decision under review involving Richard Branson and Las Vegas firm

Thursday, Aug. 31, 2000 | 10:35 a.m.

SUN STAFF AND WIRE REPORTS

LONDON -- Camelot Group Plc has won a High Court review of whether the National Lottery Commission acted unfairly in rejecting its bid for the U.K. lottery and talking exclusively to its rival.

The court will start a hearing, expected to last three days, on Sept. 15. The commission didn't oppose Camelot's appeal.

The commission last Wednesday spurned bids from Camelot and the People's Lottery Ltd., headed by Virgin Group Ltd. founder Richard Branson, for a seven-year license.

It agreed to negotiate exclusively with Branson, giving him a month to improve its bid. It rejected Camelot, citing its association with Gtech Holdings Corp., the world's largest seller of lottery systems.

"We have agreed with Gtech to purchase all relevant lottery software from them and to take over their U.K. operation and staff," Dianne Thompson, Camelot's chief executive designate, said in a statement. "This will give us complete control over the management of our lottery software and enable us to operate independently from Gtech."

West Greenwich, R.I.-based Gtech said this week it has cut about 175 jobs, 4 percent of its workforce, and will take $27.5 million in fiscal second-quarter charges amid the U.K. lottery problems.

The People's Lottery will be able to continue to negotiate with the regulator after the court rejected Camelot's request for an injunction. Camelot beat Branson for the inaugural license in 1994.

Branson's group needs to raise a further 50 million pounds ($73 million) to convince the regulator it has enough funds to run the game, the commission said.

Branson's partner in the lottery bid is Automated Wagering International (AWI), a unit of Anchor Gaming of Las Vegas. AWI has been a tough rival to Gtech, clashing over the years with Gtech in Florida, Arizona and other big lottery states.

British media in recent days have carried stories, likely encouraged by Gtech, about failures and delays of AWI systems in Minnesota, Florida, Maryland and Arizona and about fines and financial claims against the firm over lottery system failures. The National Lottery Commission found AWI technically capable of handling the British contract and AWI defended its record, saying a lot of its systems were phased in to tackle glitches.

"Our contracts have been renewed time after time," AWI President John Beach said, according to the Independent newspaper.

The U.K. lottery has raised 8.8 billion pounds for charities in six years and created 1,021 millionaires, Camelot said. About 65 percent of Britons play the lottery regularly.