Gerald Kaufman: Questions whether the Treasury should pay

The Culture, Media and Sport select committee heard that the lottery would give �750m if London hosts the games.

Half would come from new "Olympic Lottery" games, but �375m would be "cannibalised" from money that would otherwise have gone to good causes.

Lottery chiefs instead say "national pride and the Rugby World Cup phenomenon" will boost takings.

Good causes

Dianne Thompson, chief executive of lottery operator Camelot, told the Culture, Media and Sport select committee that the �375m price tag was "a worst case situation since we've assumed we won't get any new players".

Ms Thompson said the cut, to be spread over seven years, should be contrasted with the lottery's �1.3bn total annual contribution to good causes.

It's asking the lottery to raise �750m for something which we want to do as a nation Derek Wyatt MP

"To achieve the figure that we need we would need to launch the equivalent of a Thunderball, not another Lotto," she said.

"It sounds a lot of money ... but in terms of money for good causes it's about five per cent."

But Labour MP Derek Wyatt said: "It's asking the lottery to raise �750m for something which we want to do as a nation."

White elephant

Labour MP Gerald Kaufmann, chair of the committee, agreed: "Let's face it - it's an absolute and total distortion of the additionality concept."

"It's raiding the lottery and its good causes money for something that the Treasury might be expected to fund," he said.

RAIDING THE LOTTERY? The lottery will give �750m to the London Olympics Olympics-specific games will raise �375m The rest will come from funds for good causes The National Lottery gives �1.3bn to good causes yearly

"Ironically, the government will still take 12 per cent [of lottery revenues]."

And Conservative MP Adrian Flook voiced concerns that the Olympics might turn out to be a white elephant. "None of these things ever come in on budget," he said.

Camelot chairman Michael Grade said he remained "very excited" by the plans, which would "have a very healthy effect on the National Lottery".

However, he warned, proposals for 3G-style franchise auctions, which the National Lottery Committee (NLC) had earlier refused to rule out, might jeopardise the plans.

Legal disputes

Mr Grade said NLC proposals, which would probably see two or three companies running the lottery system, were "a recipe for disaster".

"This is a model which doesn't exist anywhere in the world," said Ms Thompson.

Competitive lottery tenders in Italy had seen operators tangled in legal disputes, she said.