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Regulators have tough questions for Camelot, operator of the UK's National Lottery, over allegations of underhand conduct just weeks before bidding for the next lottery franchise closes.

The National Lottery Commission (NLC) is looking into a complaint that a member of its PR team posed as a business student in order to extract intelligence from an Australian lottery consultant about potential rival bidder, Indian firm Sugal & Dumani. A Camelot worker has resigned after being confronted with allegations that she posed under an assumed name to use a GMail account in order to quiz Glenn Barry, a semi-retired lottery consultant and noted anti-spam activist.

Camelot said its staffer acted on her own initiative, without the knowledge or approval of managers. It condemned her actions and denied any suggestions of impropriety.

A spokesman for the National Lottery Commission confirmed it had received a complaint from Barry. "We have received a complaint from an individual and we are looking into the allegations and the response from Camelot. We can make no further comment until we have considered this matter thoroughly," it said. It's unclear how long the investigation will take.

The affair kicked off in late November when the Camelot staffer, posing as a business student called Karen Dickens, first contacted Barry. He responded to her questions about lottery bidding and a discussion developed where questions increasingly focused on Indian firm Sugal & Dumani.

Barry grew increasingly suspicious that he was dealing with a supplier and not a bona-fide student. When "Dickens" asked him questions about an interview with the chief exec of the Indian lottery operator published in the £1,000 a year subscription-only magazine Lottery Insider, his suspicions were confirmed.

When Barry asked his interlocutor to own up by email, he received an out of office response from a Camelot email address in response. At this point it became apparent to Barry that "Dickens" was forwarding email from her GMail account to a Camelot address. But when he confronted Camelot bosses over this they claimed that his conclusions were based on a misunderstanding of how GMail worked, allegations that riled the experienced anti-spam activist and Vietnam vet.

"If Camelot had rolled over and let me tickle them at that point nothing more would have come of it," Barry told El Reg. As it was, Camelot's defensive attitude prompted Barry to submit a formal complaint to the regulator.

Camelot denies allegations of dirty tricks. "The member of staff was alleged to have contacted the freelance journalist under an assumed name, asking his opinion about the UK National Lottery Licence competition and specifically who might be bidding. The information that was asked for was either in the public domain – or so subjective as to be no use to any bidder," it said in a statement.

"The employee concerned had previously denied the allegation – but following contact from the NLC, Camelot launched an investigation into the claims. The member of staff later admitted that – without any reference to her line manager or other senior managers, and acting alone – she had set up an email account under an assumed name. The member of staff concerned conceded that she had made a serious error – and offered to resign. Camelot has accepted the employee's resignation."

"Camelot's commitment to the highest standards of probity means that it cannot and will not condone this type of behaviour," it added.

Under an extended deadline, operators are allowed to submit bids for the UK National Lottery contract until 9 February. Thus far, only Sugal & Dumani has thrown its hat into the ring as a possible rival to Camelot. Camelot's main rival during the last bidding process, Richard Branson, has ruled himself out of this race and Australian lottery giant Tattersalls has withdrawn its application. The next lottery franchise runs for 10 years, starting February 2009. ®

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