A TEN-YEAR licence to run the National Lottery is being offered in an attempt to stimulate competition to Camelot, the company that has run the game since its inception.

The longer term, replacing the existing seven-year system, is designed to give the next company that runs the lottery a greater chance of generating an acceptable profit.

Mark Harris, chief executive of the National Lottery Commission, the regulator, said: “We are impartial as to the identity of the next licence holder. We want to run a competitive process, on the basis that the best bid will come out and win”.

Yesterday the Commission formally kicked off the bidding process for the next lottery contract, which will begin in February 2009.

The regulator will select the winning bid based on who can “raise as much money as possible for good causes” in May 2007.

This time, though, the Commission will be hoping for a less dramatic battle. In 2000 Sir Richard Branson appeared to have snatched the current lottery contract from Camelot, only for the incumbent to seek — and win — a High Court review of the decision. The Commission’s then chairman, Dame Helena Shovelton, was forced to resign.

Sir Richard, the founder of Virgin Group, is “mulling over” whether to re-enter the race. Last time his People’s Lottery bid was conducted on a not-for profit basis — while Camelot retains 0.5 per cent of revenues as profit, while giving away 50 per cent in prize money and 28 per cent to good causes.

In the year to March, Camelot made pre-tax profits of £47.2 million and distributed dividends of £32.4 million.

The company has five equal shareholders: Cadbury Schweppes, the confectionery group, De La Rue, the banknote printer, Fujitsu, the technology company, Thales, the French defence group, and the Royal Mail.

The Lottery Commission has hired NM Rothschild to advise on the contest and has indicated that it is willing to travel around the world to meet potential bidders. Robert Foster, chairman of the Commission’s project board, said: “We’ve had a lot of responses to our initial consultation, which gives an impression of the level of interest. We’re expecting a number of bids”.

Bookmakers are evaluating whether to proceed. Ladbrokes is working with Intralot, a Greek supplier of lottery technology, to examine a possible bid. It said yesterday that it was “keeping its options open”.

Sportech, which owns Littlewoods Pools, is also considering joining the race. But William Hill is not thought to be enthusiastic and Gala Group is no longer willing to bid now that it has completed the purchase of Coral.

Internationally, the most likely bidder is Tattersall’s, an Australian gaming group that bid, unsuccessfully, in the first lottery auction in 1994.

But there could be other surprises — Anthony Fry, an investment banker at Lehman Brothers, has indicated that he is willing to help to put together a consortium.

The National Lottery Commission is putting the onus on the bidders to determine how they would organise the lottery. There are currently five draw-based games, including the original Lotto, plus a scratchcard game — all introduced to support revenues when it was feared that the popularity of the Lottery was going into decline.

In the half-year to September 24, Camelot said that sales were up marginally, by £55 million, to £2.4 billion, with sales of the new Go for Gold Olympic scratchcards already running at £1 million a week. The Lottery is raising £1.5 billion to help to fund the 2012 Olympics, half of which is to come from dedicated games.