Allwyn in Camelot Takeover Talks
Incoming National Lottery operator Allwyn Entertainment is reportedly in advanced discussions to take over Camelot UK. If the acquisition were to go ahead, it would support the European operator’s transition to take over the National Lottery license in February 2024. Camelot has lost its stronghold over the National Lottery after nearly thirty years at the helm.
Allwyn was officially awarded the fourth National Lottery license in September, bringing Camelot’s 28-year monopoly to an end. ©Alejandro Garay/Pixabay
£100 Million Acquisition
Allwyn Entertainment, which is set to take over the National Lottery’s license in 2024, is reported to be in talks to acquire current license-holder Camelot UK. The £100 million deal would see Camelot drop its legal challenge against the Gambling Commission and could pave the way for a smooth license transition.
Sources say that Allwyn’s discussions with Camelot’s Canadian owner are in their advanced stages. If a deal does go ahead, the European lottery giant would find itself in control of the company it will replace as the UK’s National Lottery operator. Over the coming weeks, Allwyn could pay £100 million for Camelot’s UK operations.
Elsewhere, Camelot operates the Illinois State Lottery in the US. Illinois was the first state to privatize its lottery system. Camelot is also part of the Premier Lotteries Ireland consortium with An Post, which will run Ireland’s lottery until 2034. It is not yet clear whether Allwyn’s deal could extend to these operations.
The potential acquisition would provide Allwyn with access to Camelot UK’s financial information a year ahead of the license handover. It would also see Camelot fully cooperate with Allwyn in the time leading up to the license transition. Camelot employs around 1,000 staff, most of which are likely to work for Allwyn once the handover is completed.
Allwyn is being advised by Morgan Stanley and has not commented on the talks. The Gambling Commission, which regulates the UK’s gambling industry, has apparently been informed about the discussions. It is not yet known whether the regulator will demand separate governance arrangements for Camelot UK’s business after the completion of the purchase.
A deal would be good news for the regulator, as it would result in Camelot’s outstanding legal challenge against it being dropped. In September, Camelot dropped its appeal against the awarding of the license to Allwyn, but said that it would still pursue its claim for damages. If Allwyn purchases Camelot UK, this claim will also be dropped.
Camelot Era Over
The news comes as the latest surprising twist in a what has already proved to be a dramatic story. The Gambling Commission named Allwyn Entertainment as its preferred applicant for the fourth National Lottery license in March. Camelot was chosen as the regulator’s reserve applicant, meaning that it would only take on the license if Allwyn could not.
Camelot has been in control of the National Lottery for nearly thirty years, since it was first launched in 1994. It fought off all of its rivals for the first three license competition, and it was expected that the same would be true for the fourth license. However, the regulator’s latest selection process saw stiffer competition than ever before.
Coupled with a number of recent scandals, the regulator made the shock decision not to allow Camelot to continue the license. In 2018, the group was fined £1.15 million over a malfunctioning app that falsely told winners that they had lost. 2022 saw Camelot fined again, this time for a higher sum of £3.15 million over continuing app failures.
Alongside run-ins with the regulator, Camelot has suffered bad press in recent years. The group’s sale to the Ontario Teachers’ Pension Plan for £389 million in 2010 did not go over well with some critics, who said that the lottery should remain in British hands.
Concerns have also been raised over the falling percentage of revenues that the National Lottery donates to good causes. Camelot has moved increasingly towards offering scratch cards and instant online games to attract new players. However, these games, which some have linked with problem gambling, pay out less to good causes as more money is given out in prizes.
Allwyn Promises Changes
The National Lottery is one of the world’s biggest lotteries, and is the UK’s largest public sector contract. The £6.4 billion contract has been projected to generate between £80 billion and £100 billion in ticket sales over the course of the upcoming ten-year license. Since its launch in 1994, it has raised over £46 billion for 670,000 good causes, and created more than 6,500 millionaires or multi-millionaires.
Allwyn has promised to introduce some big changes when it takes charge of the National Lottery, including halving the sale price of tickets for the main draw to their original cost of £1. It has also committed to substantially increase returns to good causes, debut new products and technologies and improve player protections.
It confirmed its plans after being officially awarded the fourth lottery license in September. It projects that sales growth will cause contributions to good causes to effectively double. A state-of-the-art technology platform will enhance player experiences and make the lottery safer.
Speaking at the time, Sir Keith Mills expressed the group’s delight at being awarded the license. Sir Mills was part of the campaign that brought the Olympics and Paralympics to London in 2012, and acted as bid chair during Allwyn’s lottery application process. He stated:
“The whole team at Allwyn is immensely proud to be taking on the responsibility for growing the National Lottery over the next ten years. In our bid proposals we setout our plans to win back customers that have stopped playing and to bring anew generation of players to the National Lottery by introducing new games and technology to capture the imagination of the nation.”
