Scandal Dims Glitter Of Britain's Lottery
LONDON — BRITAIN'S highly successful national lottery launched last year is in trouble. It has been plunged into controversy by charges of attempted bribery against a major American shareholder and allegations of questionable conduct by a government-appointed regulator.
The contract to operate the lottery was awarded in 1993 to a consortium called Camelot, in which the gambling firm GTech Holdings Corporation, based in West Greenwich, R.I., has a 22.5 percent stake.
On Dec. 11 business tycoon Richard Branson, chairman of Virgin Airlines, who had bid unsuccessfully to run the lottery, alleged on British television that GTech chairman Guy Snowden had offered him what Mr. Branson understood to be a bribe to drop his bid. Mr. Snowden denies the charge.
But Peter Davis, the government-appointed official who awarded the contract to the consortium that included GTech and now regulates the lottery, now admits he accepted free flights in a plane and helicopters owned by GTech when he traveled in the United States. Mr. Davis made the admission Dec. 11 before a House of Commons committee, prompting opposition Labour Party members to demand the government launch an urgent inquiry. Virginia Bottomley, the cabinet minister overseeing the lottery, summoned David for a meeting today to explain his actions.
GTech is the world's largest automated lottery operator. It runs 72 lotteries on behalf of governments. In the US it operates 27 of the 37 state lotteries. GTech spokesmen deny that the company has ever behaved improperly in bidding for contracts.
Branson, however, claims that in 1993, during a private luncheon at his London home, Snowden offered him a bribe if he would drop his bid to run the lottery.
Branson's bid was based on a commitment to give all lottery profits to charity. Camelot's bid provided for it to harvest a proportion of the profits for itself.
Although GTech's Snowden has denied the charge, another businessman present at the lunch says he heard Snowden make the offer. Branson has sued GTech for defamation.
As official regulator, Peter Davis is watchdog to what has turned out to be a massive commercial success. The weekly Saturday night lottery draw is shown live on nationwide prime-time television on the BBC's main channel. Last Saturday, the winner of the draw scooped up more than 8 million ($12.2 million). So far more than 100 people have been made overnight millionaires by the lottery.
In the first 20 weeks sales of 1 lottery tickets were 40 percent above Camelot's predictions. Turnover is running at 5 billion annually, a level not expected to be reached for three years. At the outset, Davis forecast that Camelot would not turn a profit for some time. Instead, it is already profitable to the tune of 50 million a year.
Its success has been boosted by the introduction of a supplementary scratch-card lottery feature every week.
In October 1994 Davis, shortly before he allowed Camelot to sell scratch cards, traveled around the US in a GTech-owned plane. A member of the Commons committee hearing Davis's testimony described him as "an innocent abroad." Davis said he had accepted the free rides to save the government money.
Introduction of the lottery has been applauded by charities and cultural organizations that can apply for grants from the lottery fund. In its first 24 weeks, Camelot generated more than 600 million earmarked for "good causes." Camelot managers point out that the company's profits represent only 1 percent of total turnover.
Church leaders, however, including the Archbishop of Canterbury, have been critical, claiming the lottery encourages the attitude that people can get something for nothing.