The Interview: Camelot's Lady Luck is on a quest for the ultimate prize: a new lotto licence

Dianne Thompson Chief executive of Camelot

Lottery grants are a frustrating subject for Camelot, which is no more than the operator of the system that raises the funds and has no say in where the lottery money goes. But Ms Thompson is fully behind the London Olympics, believing it will boost sales and public interest in the lottery. "This is an issue that does need to be managed carefully, but players for a long time have been asking to have more of a say in what causes their money goes to. This will be the first time that players will be able to choose a dedicated cause. It could create a halo effect for the whole lottery and see greater interest and involvement from the public."

Ms Thompson, 54, is five years into her reign at Camelot, but her coronation was not a smooth ride. Having fought off a fat-cat dispute over the pay of her predecessor, she was then immediately caught up in a grubby showdown with the irrepressible Sir Richard Branson, who competed with his not-for-profit People's Lottery bid against Camelot for the 2002-09 licence. Only four years later, the potential rematch is being drawn up as the bidding process for the next licence gets under way.

As a social concept, the lottery will always have its critics; those who say it has made gambling a state-endorsed activity and that it is a tax on the poor that benefits arts patronised only by the rich. Ms Thompson thinks, on the whole, that almost every community in the UK has benefited from the £17bn raised over the past 10 years of the lottery. But as the next licence-bidding process approaches, Ms Thompson has to defend Camelot and its commercial record in the lottery if she is to keep her job for a few more years.

The fiasco of the previous licence award, where Camelot's bitter battle against Sir Richard and his People's Lottery bid ended up in the courts, has not been forgotten. Up for grabs was a seven-year monopoly for a business that has more than 40 million customers - a prize, on the face of it, that would be hotly contested. But the problem last time was that there were only two bidding parties - Camelot and Sir Richard - and neither bid was deemed good enough by the regulators. There were concerns that Camelot's technology partner, G-Tech, was not fit and proper and also fears that Sir Richard's not-for-profit bid was not financially viable.

"Time was running out before our licence expired and after deciding that neither bid was satisfactory, the National Lottery Commission (NLC) went ahead in exclusive talks with only one bidder. They chose the People's Lottery, believing that it would be able to solve its problems faster than we could. But we were able to solve our problem almost overnight. In 48 hours, we bought the UK arm of G-Tech and were able to vouch for the security and integrity of the whole system.

"I was furious that we had been written out of the picture, and believed I had no choice but to challenge the decision to proceed with the People's Lottery through a judicial review. We won," the straight-talking Northerner says with typical candour. So will the 2009 licence competition be a straightforward rematch of 2001? No, believes Ms Thompson. After Camelot finally won the day in 2001, Sir Richard was quoted as saying he would never get involved in the lottery again. But Ms Thompson believes he will not be able to help himself but get involved this time around. "I'm sure he will bid again," she said.

In any event, parliament was not impressed by the saga of 2001, and has demanded changes to avoid a repeat. The NLC has been charged with designing a competition process that is more transparent and will encourage more bidders to take part. That is why the work is already starting, although Camelot's licence runs until 2009.

There are encouraging signs already - some 20 parties responded to a consultation document sent out by the lottery commission on the bidding process. "I have no doubt that there will be more than two competitors," she said.

One possibility suggested to attract bidders was for the Government to pay bidding costs. Ms Thompson was against this - "if an organisation can't afford to make a bid, then they can't afford to run the lottery".

More bidders may be interested in competing now that lottery sales are enjoying renewed growth. Ms Thompson, who was a regular lottery player until she joined Camelot, has proved to be the group's very own Lady Luck, reversing a six-year decline in sales. The year to the end of March was its second year of growth, with sales up more than 3 per cent to £4.8bn.

Some people find the array of games bewildering - Thunderball, Lotto Extra, EuroMillions, not to mention the array of scratchcards - make the process of buying a lottery ticket almost as challenging as buying a coffee these days.

"We have introduced about the right number of games now," she said. "And we have done a lot of work to increase accessibility to the lottery, putting terminals in more retail outlets, increasing internet sales, introducing a service to buy tickets using your mobile phone, and even interactive television."

She has overseen the introduction of EuroMillions, where the UK joins up with eight European countries to pool their jackpots. Last night, as part of the EuroMillions draw, a double rollover led to a record £77m prize fund. Ms Thompson was expecting a sales spike: "Last week there was a rollover and we saw sales on the draw shoot up to £15m from normal sales of £3m. We are expecting even more for this week's draw."

But, she warns, wannabe lottery operators should notbe fooled by the thought of large-scale spoils from the business. "We are left with a profit of only 0.5p on every £1 ticket sold. Fifty pence goes to the winner, 28p goes to good causes as set out by Parliament, 12p goes to the Government in lottery duty, 5p goes to the retailers that sell the tickets, and 4.5p covers our operating costs. For our shareholders, there is not much to share out." This, she says, means operators have to be a commercial company.

"You need that drive to get the profit, otherwise your costs mount," she said. She wants to see the commission set out a sales target it expects the operator to achieve, so that unrealistic bids are not indulged.

But with any monopoly system, would-be usurpers of the incumbent operator are often put off by the advantages of already running the show and knowing the market inside out. She disagrees. "A lot of changes have already been made to bidding system. For example, we don't own any intellectual property on the terminals, and we have to share our market data with bidders. But there is also an incumbent disadvantage. A newcomer has no track record to worry about. But if something goes wrong in the next couple of years with our systems, then we will pay for it," she says.

But she won't be relying on luck when Camelot bids for the next licence. She is preparing to fight for it, and the jobs of Camelot's 800 staff, in a clean-cut auction.

Dianne Thompson: In it to win

Age: 54

Salary: £608,000 including pension contribution and bonus

Career: Started as a marketing trainee for the Co-op in 1972. Moved to ICI Paints in 1974 and in 1979 began a seven-year stint as a lecturer at Manchester Polytechnic. In 1981 set up an ad advertising agency, Thompson Maud. Between 1992 and 1994 was marketing director for Woolworths. From 1994 to 1997, marketing director for the Signet jewellery group. In 1997 joined Camelot as operations director, becoming chief executive in December 2000. Also sits on the Press Complaints Commission

Family: Divorced, with one daughter, aged 21

Interests: Theatre, ballet, opera. Also enjoys cooking - owns 10 per cent share of The Artichoke restaurant in Amersham, Buckinghamshire