Wheels come off lottery firm Chariot

Chariot, the stricken company behind the Monday online lottery, warned yesterday that it was limping towards administration after an attempt to find a white knight suitor had failed.

The loss-making group, which had hopes of rivalling the National Lottery when it launched earlier this year, admitted it was running out of time amid plunging ticket sales. It has burned through £2.8m of cash it raised in an emergency fund-raising in June, which means it has spent more than £17m to raise just £1.5m for its charity partners.

Peter Jones, who took over from Tim Holley as chairman at the rights issue, said the company needed to raise more money or sell itself outright to avoid falling into administration. His warning wiped away most of Chariot's remaining market valuation. Its shares, which were listed at 115p in February, closed at 0.37p, down from 2.62p, valuing the company at just £260,000.

Despite the precipitous share price collapse, Mr Jones, who is also chairman of the Tote, yesterday claimed that Chariot was "not under immediate pressure in any direction". He said the company had enough cash to trade for "a number of weeks", although how many is unclear given that its weekly ticket sales are still falling.

Mr Jones said he had "yet to determine" whether he would invest more of his own money in Chariot. When he ploughed £250,000 into the rescue rights issue in June, he said that either he and his fellow directors, who invested a combined £350,000, "had confidence or were stupid".

He blamed his failure to find a white knight on the fact that gaming companies were distracted by the calamity that hit their business in the US after the government made internet gambling illegal. But he said Chariot was still in talks with potential bidders.

Chariot's weekly ticket sales have averaged less than 280,000 despite initial hopes that it would sell more than 5 million. It blames its failure on its inability to offer more than £200,000 in prize money.