Lottery watchdog wants more bite

The director general of Oflot, the National Lottery regulator, said yesterday that he wanted "stronger regulatory teeth" with which to ensure lottery operator Camelot does not breach licence terms.

Peter Davis also said that he thought Camelot's reputation had "certainly suffered" over the awarding of huge bonuses to its directors, and he would be discussing the issue with them.

Speaking at the launch of Oflot's annual report for 1996/97, Mr Davis said Oflot had the ability, in extreme cases, either to rescind Camelot's lottery licence, which runs for seven years, or go to court in order to enforce its licence. But he wanted the ability to impose "substantial" financial penalties to deal with less serious licence infringements.

"I want to see stronger teeth ... this has been on the table for some time," he said. "I have raised it with the Secretary of State."

He cited the situation this year when Camelot had been unable to produce the required number of retail outlets for lottery tickets.

This "serious breach", he said, was exacerbated by the fact that information the organisation submitted to Oflot was incorrect. Oflot threatened to take Camelot to court, and the lottery operator corrected the problem.

"It was a situation where the imposition of a financial penalty would have been entirely appropriate," Mr Davis said.

He would not be drawn on the level of fines he wished to impose, but said they should be "substantial".

"The level of penalty that is necessary is one which will reflect the gravity of a licence breach but will also be meaningful to a substantial business with a turnover of over pounds 5bn per annum," he said.

Camelot's executives were recently heavily criticised for awarding themselves massive bonuses, despite a fall in ticket sales. Mr Davis refused to comment on how much Camelot's executives should be paid but said that if public disquiet about the matter were proven to affect sales he would intervene, as his remit was to ensure that the National Lottery is able to pay the maximum to good causes.

"If I felt that that was failing to meet statutory objectives then it would be right for me to talk to them about it," Mr Davis said. He agreed that Oflot was "the guardian of the image of the National Lottery" and said it would be under this guise that he would be talking to Camelot's directors about their pay.

"Camelot's reputation has certainly suffered from the handling of the directors remuneration issue," he said.

He would not respond to criticisms that he had not been "vigorous enough" in his dealings with Camelot, until the Government published its own response. "The only point I would make is that comparison between regulation of the lottery and regulation of some other industries, utilities for example, are extremely difficult," Mr Davis said.

During the period covered by the report last year, overall ticket sales, including both scratchcards and on-line sales, dropped pounds 500m from pounds 5.2bn to pounds 4.7bn - with a loss of pounds 143m to the good causes fund.

However, Mr Davis said the lottery was still way ahead of initial targets. The Oflot annual report states that for the duration of Camelot's licence the company will be donating 30 per cent of sales to good causes, 2 per cent more than estimated. He said in the year to March, pounds 1.44bn was donated to good causes.