Camelot, which ran the national lottery for almost three decades, is seeking to overturn the decision to hand the license to rival Allwyn. He will go to court later this month in an appeal over delays in delivering the £6.4bn contract. The case threatens to embroil the lottery in its biggest controversy since it began in 1994 – and there is even a risk that the lottery could be suspended for the first time in its history. The Gambling Commission warns in a legal brief obtained by the Observer: “In the worst-case scenario, there will be a gap in service between the end of the third license on 31 January 2024 and the start of the fourth licence. The Commission expects there to be a total shortfall in good cause payments of at least £1bn and, in the event of an interregnum, much more.’ The Lottery raised around £1.9bn for good causes in 2020-21. The money raised is being donated by 12 distributors, including UK Sport, which invests funds to maximize the performance of UK athletes at the Olympic and Paralympic Games. the National Lottery Heritage Fund; and the National Community Lottery Fund, which provides money for food banks. Kevin Brennan, the Labor MP and member of the digital, culture, media and sport committee, said: “Any delay in delivering the lottery that denies money goes to good causes would be a disaster, particularly at a time when people are facing increasing difficulties. “It would be best for everyone if this issue is quickly resolved and the new lottery operator takes over as soon as possible.” Allwyn is due to take over management of the lottery from February 2024, but will have no time to prepare if Camelot succeeds in a court challenge to delay the handover. New legislation may be required for a temporary operator or the lottery may even be suspended. The case will raise the question of why the Gambling Commission did not ensure there was sufficient time in its timetable to allow for potential legal challenges. It will also examine the much-disputed ratings the regulator gave competing bids. To date, the ratings are confidential. The battle for the lottery’s fourth license has been hotly contested, with Czech operator Allwyn pledging to revitalize the national lotteries and cut the cost of ticket prices to £1. Allwyn is part of a lottery and technology group led by Czech billionaire Karel Komárek. Karel Komarek, head of the Czech investment group KKCG which owns the new UK lottery company Allwyn. Photo: CTK/Alamy In the weeks leading up to the announcement, executives at Camelot’s Watford headquarters were increasingly confident they had won, despite Allwyn’s impressive proposals. They were told that their business plan, a key element of the bid, had scored more points than Allwyn’s. One newspaper even reported that the company was well on its way to winning the bid with the headline: “Camelot hits National Lottery jackpot – again”. There was surprise and outrage in Watford when Allwyn emerged victorious, beating three other contenders, including Camelot. Executives at the existing lottery company were left baffled as to how the prize had slipped out of their hands. “They realized they had lost,” said a source. “They just didn’t understand how.” One of the main reasons Allwyn won was its forecast to raise £38bn for good causes over the 10-year licence. By comparison, Camelot, which is owned by the Ontario Teachers’ Pension Plan investment fund, has returned more than £46 billion to good causes in its 28 years of running the lottery. Camelot argues that the regulator did not properly assess the risk that Allwyn would not deliver on its ambitious proposals. A 0% risk factor – known as a solution risk factor – was ultimately applied to both offers, according to the legal claim in the High Court. Camelot argues that if the correct risk factor had been applied, “the preferred applicant would have been appointed”. The key battleground for the bid was the competitors’ business plans, which had five separate divisions. Camelot executives were confident that they had beaten Allwyn in three of the divisions – games, channels and transition – and had drawn in the other two divisions. Archie Bland and Nimo Omer take you to the top stories and what they mean, free every weekday morning Privacy Notice: Newsletters may contain information about charities, online advertising and content sponsored by external parties. For more information, see our Privacy Policy. We use Google reCaptcha to protect our website and Google’s Privacy Policy and Terms of Service apply. Details of a claim brought by Camelot say the Gambling Commission failed “properly and lawfully” to assess the offers and “committed manifest errors”. It seeks an order setting aside the decision appointing Allwyn as the preferred applicant or damages in an amount to be assessed. The Gambling Commission says the competition was open, fair and robust. It denies the claims against it or any breach of its legal obligations. The case is due to go to trial early next year, but Camelot argues that delivery to Allwyn should be suspended until the case is heard. A judge ruled in June that the delivery should continue, but Camelot will go to court later this month to appeal that decision. If Camelot is unable to delay delivery, it will seek compensation. The total damages claimed for Camelot and its technology partner International Game Technology will be approximately £600 million. A Camelot spokesman said the Gambling Commission was risking a claim for hundreds of millions of pounds by trying to grant the license before legal challenges were exhausted. A spokesman said: “This huge bill can be avoided entirely simply by waiting until the court’s decision before awarding the contract to run the national lottery. “The good reasons and the taxpayer should never have come in for hundreds of millions of pounds. Fortunately, there is still time for the regulator to change course, and we urge them to do so.” A spokesman for Allwyn said: “The hearing in September represents the last chance to avoid even more losses to good causes, on top of the damage already caused by the delay so far. Camelot will still have its day in court in the new year, in which we are confident it will be proven that the Gambling Commission conducted a thorough, fair and robust competition.”
