A convicted rapist who allegedly swindled £2.5 million ($3.12m) out of the National Lottery by using a fake ticket was reportedly helped by an "insider" has been allowed to keep his winnings.

Camelot made the huge payout to Edward Putman, 51, who was jailed for seven years for raping a pregnant 17-year-old in 1991, in 2009, based on a ticket which Camelot said was "deliberately damaged".

The National Lottery was fined £3m by the Gambling Commission on Friday for breaching terms of its operating licence over control of its databases, the way it investigated prize claims and its processes "around the decision to pay a prize".

But Putman still has his winnings after an investigation against him was dropped in February – despite claims he had inside help to cash in the unclaimed winning ticket. Camelot have refused to comment on this allegation.

According to a report in The Sun, the suicide of Giles Knibbs, 38, who worked for Camelot's fraud department, was connected to the alleged scam. Knibbs was reportedly meant to have had a share of the jackpot with Putman. The pair met when Putman carried out some building work for him.

A friend told the newspaper: "What Camelot have said was incorrect, it wasn't a damaged ticket. I would expect (Giles) was aiming to get financial benefit. I think he received some. They fell out which is why it all came to a head."

Hertfordshire Police launched an investigation in February, but did not have enough evidence to prosecute Putman.

Camelot, which was only informed of the alleged fraud in October 2015 by a whistleblower, said it was difficult to investigate the "insider claims" as many staff had moved on since 2009 from their headquarters in Watford.

Putnam who had asked for anonymity when he won in 2009, was only revealed as a winner when he was convicted of a £13,000 benefit fraud in 2012. He said he was broke despite owning two homes in Kings Langley, Hertfordshire, worth a combined £1.2m and a fleet of sports cars, all paid for by his winnings.

Camelot chief executive Andy Duncan issued an apology, calling it a "unique and one-off incident".

In a statement, he said: "We accept that, at the time, there were some weaknesses in some of the specific controls relevant to this incident and we're very sorry for that.

"It's really important that people understand that this allegation relates to a unique, one-off incident dating back to 2009 and involves a potentially fraudulent claim on a deliberately damaged ticket. It has nothing to do with the National Lottery draws themselves.

"We've strengthened our processes significantly since 2009 and are completely confident that an incident of this nature could not happen today. We welcome the Gambling Commission's confirmation that this is the case."