High Court Allows Lottery Handover
The Gambling Commission has been given permission to proceed with awarding the National Lottery’s operating license to Allwyn. Following the regulator’s decision earlier this year to name the European lottery giant as its preferred applicant, current license holder Camelot launched legal proceedings. The High Court has now sided with the Gambling Commission, paving the way for the first new National Lottery operator since its launch in 1994.
Camelot has lost the National Lottery’s operating license after nearly thirty years at the helm. ©Ekaterina Bolovtsova/Pexels
Allwyn to Receive License
The High Court has granted the Gambling Commission’s request to proceed with awarding the upcoming National Lottery license to its chosen candidate, Allwyn. In March, it announced Allwyn as its preferred applicant for the new license period, which is set to begin in 2024. The decision came as a shock to many, although the competition was closer than ever before.
The Gambling Commission’s victory means that incumbent operator Camelot will be dethroned for the first time in the history of the National Lottery. The Canadian-owned group has run the National Lottery since it was first launched in 1994. It successfully fought off the competition when the license came up for tender again in 2001 and 2007.
However, the competition for the fourth license received more applications than previous competitions, some of which came from the world’s leading lottery operators. From the get go, Allwyn’s application was one of the most formidable. Despite this, many considered that Camelot was likely to hold on to the license.
The Gambling Commission, which regulates the UK’s casinos, sportsbooks and online operators, oversaw the secretive competition process, which took a year and half to complete. Alongside submissions from Allwyn and Camelot, it judged applications from Italian operator Sisal and porn baron Richard Desmond.
Ultimately it was Allwyn’s application that pleased the judges most. Czech oil and gas magnate Karel Komárek launched Allwyn as the UK identity of his European lottery firm Sazka in 2021, in preparation for his bid. Sazka has since rebranded its corporate identity across all core parts of its business to match Allwyn.
To strengthen its bid, Allwyn headhunted members of the London 2012 Olympics committee, including Lord Coe and Sir Keith Mills. It also proposed an ambitious investment plan that promised higher contributions to good causes. In the end, it was this financial plan that won over the Gambling Commission and sparked a fierce legal row.
Regulator Faces Legal Challenge
Soon after the regulator named Allwyn as its preferred applicant, Camelot launched a legal challenge to appeal the decision. The competition saw Camelot finish in second place, meaning that if Allwyn was not able to take up the license it would be handed over to Camelot.
Legal challenges were also launched by Camelot’s technology provider IGT and fellow competitor Richard Desmond. The unsuccessful bidders will present their cases to the High Court in October. According to Camelot, the competition was unfair as it claims that rules were changed late in the game.
As part of the application process, bidders were required to make financial projections based on how they would operate the National Lottery if granted the license. Initially, it was understood that the regulator would apply a risk factor discount of up to 15% on these projections.
However, when coming to its final decision the risk factor was revised down to zero. This move was key in Allwyn’s scorecard coming out on top, as it projected that it could raise £38 billion for good causes. That sum proved to be millions more than Camelot offered.
While the case was ongoing, the Gambling Commission was unable to procced with awarding the National Lottery license to Allwyn. It sought permission from the court to have the temporary block lifted, so that it could sign the enabling agreement. The regulator warned that if prevented, the transition of the lottery license could be delayed.
Reinforcing its case, the Commission claimed that a delay in the handover of the license could have a negative impact on payments to good causes. Concerns were also raised that for the first time in its history the National Lottery could be forced to pause its operations.
Suing for Damages
Camelot did not agree with the regulator’s claims, countering with the argument that awarding the license to Allwyn could deprive the lottery’s good causes of up to £800 million. It added that by pushing the license through too hastily, payments to the National Lottery’s beneficiaries could be diminished.
On June 29th, the High Court agreed to lift the suspension, effectively bringing any hopes that Camelot would continue to operate the National Lottery to an end. Now the Gambling Commission can commence its work towards formally awarding the upcoming license to Allwyn.
Announcing the news, the Gambling Commission stated that its priority is to ensure a seamless and timely transition that would benefit participants and good causes. It maintains that it carried out a fair competition and that its evaluation was lawful. The trial is not yet over, and the Commission is preparing to face the complaints made against it.
It is expected that Camelot and other complainants will sue the Gambling Commission for compensation of lost income. Camelot is expected to pursue a claim for £500 million in damages. While it is unlikely that Camelot will be granted the 2024 license, a ruling in its favor in October could see the arguments continue.
The ten-year license to operate the National Lottery is the UK’s largest public sector contract. The lottery is predicted to generate between £80 billion and £100 billion in ticket sales. Allwyn is due to formally take over the license in February, but the timescale for the process is now tight. The Commission has said that it needs at least two years to complete the process.
Responding to the judgement, a spokesperson for Camelot said that the group will now take some time to consider its next steps. It believes that it still has a strong legal case, and in the meantime will remain dedicated to maximizing returns to good causes. They added:
“While disappointing, this judgement only addresses whether or not the Enabling Agreement can be signed while our case is heard. The judgment on whether the Gambling Commission correctly and lawfully awarded Preferred Applicant status is being dealt with separately.”
