National Lottery operator Camelot has said it could set up rival lotteries if it loses its bid to renew National Lottery franchise.

Camelot is currently bidding for a new licence to run the lottery for another seven-year period. Its current contract expires in 2001.

If it fails to win a new licence, the company could make use of its nationwide network of terminals to run a series of smaller lotteries, according to The Times newspaper.

A Camelot spokeswoman told BBC News Online the company would study all the options.

"As a company whose sole purpose is to operate the National Lottery, we are wholly concerned on winning the bid for the next licence," she said.

"If we were to lose the next licence, we have 15 months to look at all the options and decide what is best for the company and its 800 employees."

Camelot could use its 35,000 terminals in shops, supermarkets and petrol stations across the country to run a series of lotteries if it loses.

Smaller lotteries

Although it would not have the rights to operate a national lottery, it could operate smaller lotteries, each raising a maximum of �5m annually for charity.

But it would need to apply to the Gaming Board of Great Britain for permission.

Camelot's rival for the National Lottery is the People's Lottery, run by Sir Richard Branson and Microsoft's Bill Gates.

Recently, a third bidder - the little known "Charity Consortium" - dropped out of the race.

The winnre must fulfil the National Lottery Commission's expectation that the next licence should raise more for good causes than the �10m that the present lottery is expected to raise in total.

Camelot has suffered from a public perception of it as a greedy company, despite always staying within the regulator's rule that profits should total no more than 1% of takings.

There was a public outcry in 1997 when three members of the Camelot board, including the chief executive Tim Holley, picked up six-figure bonuses.

Camelot hopes to retain its licence by announcing new online games and a �1bn investment in technology.

The People's Lottery says it will create a millionaire a week through a new game, which will better the odds of winning.