No danger to Camelot's licence to print money

'Other regulators in gas,electricity and water are beginning to talk of opening up the regulatory process. Oflot may find it needs to do that, too'

Ever since its launch, the national lottery and its operators, Camelot, have been bathed in controversy. Try as it might, Camelot - a consortium of Cadbury Schweppes, De La Rue, GTech, ICL and Racal - has been unable to win the public relations battle. The regulator's careful demonstration that Camelot offered the best returns to good causes because of its lower operating costs was largely ignored. A National Audit Office report in July, which said the evaluation process was comprehensive, logical and competitive and that Camelot offered the highest returns to charities, also failed to dampen public doubts. Set against its leading rival, Richard Branson, who promised to give all his profits to charity too, Camelot was always going to be on a hiding to nothing.

The latest shenanigans have put the lottery's problems on to an altogether different plane. Allegations by Richard Branson of attempted bribery and furious denials by GTech have been followed by an admission by Peter Davis, director general of Oflot that he accepted a free flight while visiting GTech. The latter was at best unwise and naive, but it would not be enough in itself to impugn his integrity. Direct allegations of corruption, however, raise very real concerns both about Oflot itself and about regulation of private sector monopolies generally.

Mr Davis is in effect a government department of his own, with powers independent of ministers, sitting secure in a blanket of secrecy and confidentiality, which he used on Monday to fend off awkward questions about how much he knew about GTech. That is hardly a way to inspire public confidence in the decisions Mr Davis took last year.

Other regulators in gas, electricity and water are beginning to talk of opening up the regulatory process to public scrutiny. Oflot may find it needs to do that, too, if it is to carry the public and Parliament with it. Better still, the load should be taken off one person and shared with a committee.

Oflot also has some pretty tough powers it can use against Camelot, including the ability to revoke its licence. Furthermore, it can force shareholders to bow out by finding them not fit and proper. These are, however, nuclear weapons, so dramatic that they are hard to use because the aggrieved party is entitled to demand the highest standards of proof and can pursue appeals through the courts. Regardless of who is right or wrong in this particular spat, therefore, the case is now almost overwhelming.