By THABO KOBOKOANE

THE government is looking at ways of capping the profits of a national lottery following public criticism of huge lottery earnings in the UK.

"There is a feeling that capping profits is important, but the lottery must remain commercially viable for its operator. This is to avoid controversies sparked by the UK lottery, run by Camelot," a highly placed source said.

Although the Lotteries Bill presented to parliament last year does not provide a breakdown on proceeds, it is generally accepted that 50% of turnover should go to prize money, 35% to good causes, 10% to operational costs and marketing and 5% to operators.

"If turnover is low, this figure may not be an issue, but if it is high, say R4-billion, then 5% could present publicity problems," says the source.

Camelot last year announced record sales of £5,2-billion in its first year of operation. About £1,4-billion was channelled to charities, but the operators were criticised for making too much money.

A decision will be taken once a team of consultants has undertaken extensive feasibility studies on the potential value of a lottery.

The lottery licence is expected to be awarded in 1998, but the race between bidders is hotting up.

Many major operators are thought to have shown interest in the lottery, including the Greek-based Intralot, Swedes Essnet and the French state lottery operator, International de Jeux.

UK-based Littlewoods is said to have held discussions with Independent Newspapers and the National African Federated Chamber of Commerce. Sources have indicated the group has quietly withdrawn from the scene.

International Lottery and Totalisator Systems, which provides an on-line system for the Royal Hong Kong Jockey Club, has spoken to everyone, and is "keen to get in bed with Don Ncube's Real Africa Investments".

Tim Groth, vice-president of technical operations at ILTS, said the ILTS board would be in South Africa in February to make presentations to interested parties.

Other groups that have been linked to ILTS include Opus Investments, whose shareholders comprise Games Africa, Nail and Thebe. The group is "desperately trying to get the Post Office on board, to no avail".

G-Tech, one of the key players in the UK Camelot consortium, is in talks to join Opus Investments. Meanwhile, Games Africa announced on Friday it had won the licence to run "scratchcard" gaming in Zimbabwe and that it was poised to win the contract to run that country's lottery. Bidding for the lottery would start in about two months time.