UK National Lottery Contract Battle Could Bleed ‘￡1B from Good Causes’

Posted on: May 9, 2022, 02:03h.

Last updated on: May 10, 2022, 09:36h.

Philip Conneller @casinoorgphilc Read More

Expertise: Gaming Business, Regulation, Tribal Gaming.

The UK Gambling Commission has been urged to delay transferring the UK National Lottery license from current operator Camelot to winning bidder Allwyn Entertainment. That’s to avoid draining lottery coffers of up to ￡1 billion (US$1.2 billion) in funds that should go to good causes, according to Camelot’s former boss.

Dame Dianne Thompson wrote in a letter to the UKGC that the legal battle launched over the lucrative contract could get messy and expensive if the regulator shifts the license over to Allyn sooner rather than later.

Once made, the transition would be costly to reverse if it is ultimately overturned by the courts, she claimed. Camelot’s contract is set to expire in February 2024.

‘Risky’ Transition

“I fully understand the Commission’s enthusiasm for ensuring that their preferred applicant has as much time as possible to enact a successful transition,” wrote Thompson, who was Camelot’s CEO from 2000 to 2014.

“Transition is a complex and risky process – as I know only too well – that will clearly not benefit from a truncated timeline. I’m equally sure that no one – least of all the Gambling Commission – would wish to risk taking up to one billion pounds from good causes, particularly during a cost-of-living crisis.”

But the regulator said in a statement that the reverse is true.

We are confident that we have run a fair and robust competition,” said the commission. “A delay to the implementation of the [next] license poses a significant risk which could diminish funds going to these causes.”

The UKGC awarded the lottery gig, one of the UK’s most lucrative public sector contracts, to Allwyn in March. That was after a protracted and highly secretive bidding process. The contract is estimated to be worth ￡80 billion (US$100 billion) over the next decade.

UKGC ‘Changed the Rules’

Allwyn is a UK subsidiary of Czech lottery giant Sazka. Camelot has operated the UK National Lottery since its inception in 1994. The latter company, along with its software supplier, IGT, and another losing bidder, Northern & Shell, have each sued the UKGC to contest the decision.

Their arguments focus on the allegation that the regulator “changed the rules” toward the end of the process.

A “risk factor” discount of up to 15% was supposed to be applied to the financial projections made by each bidder. But the Telegraph reports this was mysteriously removed in the final assessment. ??

The IGT lawsuit reveals that Allwyn scored 87.2% and Camelot 85.7% in the bidding process. But crucially, Allwyn projected higher revenues and pledged to give significantly more money to good causes.