World champion Dott must now win his last group match to stand any chance of qualifying.
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But Higgins' fellow Scot Graeme Dott is facing an early exit, after losing both his opening matches.
Current world champion Graeme Dott's hopes were dealt a blow when he lost 3-1 to Stephen Maguire.
BBC: SPORT | Other Sport... | Snooker | O'Sullivan books slot in last 16
Dott needs to win his last three group matches to have a chance of reaching the last 16.
Reigning world champion Dott, who will meet Steve Davis or Alan McManus next, was more satisfied with his display.
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In what proved to be the final frame, Dott came within a missed blue of forcing a one-frame shootout.
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Dott came out fighting after the break and took the eighth frame comfortably.
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Ken Doherty, the 1997 champion, plays Joe Swail on Monday, while 2006 winner Graeme Dott plays Jimmy Michie on Tuesday.
Following a defeat at the Crucible in 2000, Dott accused Davis of deliberately taking long toilet breaks between frames to upset his rhythm.
BBC: Dott thrashed Ronnie O'Sullivan 5-0 in the previous round
Dott now faces fellow Scot John Higgins, who eased past Australia's Neil Robertson, the player who beat him at the Welsh Open in January.
BBC: Dott thrashed Ronnie O'Sullivan 5-0 in the previous round
Dott fought back with some excellent matchplay snooker to bring the score back to 7-7, but he could never get his nose in front.
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"I would rather play all my matches today but, if I'm being honest, I can't see myself winning my other four matches, " said Dott.
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Higgins stormed into a 3-0 lead before Dott took frame four.
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Dott's fellow Scot Stephen Hendry started well, beating Mark Selby 3-2.
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Dott's surge put him on the verge of his first ever victory over his fellow Scot in their 10th meeting, but Hendry proved his enduring class.
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Higgins moved 5-2 ahead but Dott won frame eight, edged the next two with clearances of 57 and 64 to draw level and won the deciding frame 61-20.
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Dott, who had been in excellent form on his way to the final, refused to be intimidated and hit back with breaks of 56 and 73 to level at 2-2.
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The Northern Ireland Trophy runs from August 13 to 20 and will feature the world's top 32 players including Ronnie O'Sullivan, Stephen Hendry, Ken Doherty, John Higgins and world champion Graeme Dott.
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Graeme Dott is out of the reckoning after losing 4-0 to Anthony Hamilton, his third successive defeat, while world champion and world number one John Higgins cruised to a 4-0 win over Mark King.
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