The High Court of England and Wales found ‘no mitigating errors’ in the 2022 tender or procurement processes for the Fourth National Lottery licence.
The determination by Justice Joanna Smith dismissed the challenge made by The New Lottery Company (TNLC), the lottery firm set up by UK media tycoon Richard Desmond’s publishing group, Northern & Shell.
TNLC had competed against Allwyn and then-incumbent Camelot UK to operate the National Lottery. The contest was held by the UK Gambling Commission (UKGC) with the support of an independent board formed for the competition only.
The board approved TNLC’s entry in phase-1, presenting its credentials on financial status to operate the fourth licence. However, TNLC would be rejected in phase-2 of the competition (the scoring stage).
Concerns were raised about the compliance and technical accountability of its bid. The board did not provide a score of TNLC’s bid in the second stage, stating: “Due to failures in mandatory pass/fail criteria, TNLC’s application was not included in the final ranking of applicants.”
The final phase saw Allwyn UK (formerly SAZKA) compete against incumbent Camelot UK, the Ontario Teachers’ Pension Fund-backed firm that had run the National Lottery since its launch in 1994.
Reviewing the procurement mechanisms of the tender, Justice Smith rejected TNLC’s claims that the process has been flawed and that Allwyn UK should be recognised as an unlawful victor in the contest.
End of a long legal road?
Upon proclaiming Allwyn’s victory, TNLC challenged modifications granted by the UKGC to delay the transition of contract, claiming that Allwyn had not been able to fulfil a basic requirement of its tender – which TNLC believed had been ignored by the board to favour Allwyn.
However, Justice Smith rejected the claims, stating that the UKGC has the right to make necessary adjustments “in a response to delivery risks”. The transfer of a generational contract would require “a compression of time available to achieve transition” to meet “ongoing implementation challenges”.
Concerns were noted on the transition of the contract following the decision, and Camelot would make its own legal claim against it. This was withdrawn after Allwyn UK acquired Camelot UK’s existing operations in February 2023.
The transaction was undertaken to ensure that Allwyn would take ownership of the National Lottery by February 2024, in time with the competition’s requirement.
The court rejected this argument in full, with Justice Smith concluding that the alleged failings had “no causal relevance to the Process Claim”, and therefore could not have affected the outcome of the competition, adding that TNLC’s application “was not included in the final ranking of applicants” due to its failure to meet mandatory criteria.
Of significance, Justice Smith’s determination finds that the board overwhelmingly stuck to the mandate of the tender to select a winning suitor on the “emphasis on delivering returns to good causes while maintaining high standards of player protection and propriety”.
The court heard that the process was structured to ensure “a fair and transparent competition, in which all interested parties are on an equal footing,” with oversight mechanisms and independent advisers embedded throughout.
The decision comes six weeks after the Competition Appeal Tribunal (CAT) dismissed Desmond’s claims that Camelot UK had at one point received an unlawful £70m marketing subsidy from the Gambling Commission.
Commission praises milestone decision
All allegations made by TNLC against the Gambling Commission have now been fully rejected by the High Court. In a statement, the Commission deemed the lawsuit as an important milestone in the history of the National Lottery.
“The judgment gives resounding support to Good Causes by enabling Allwyn, with oversight from the Commission, to continue with their plans of investment in the National Lottery without further distraction,” the regulator’s statement read.
The Commission added that the decision is evidence of its integrity during the granting of the Fourth National Lottery Licence, and that none of the contested changes to the licence have contradicted procurement regulations.
“Our priority remains to continue regulating The National Lottery for the benefit of participants and Good Causes.”
Providing a statement to SBC, Allwyn reiterated the High Court view that: “The Gambling Commission ran a fair and lawful licence competition, properly awarding the Fourth National Lottery Licence to Allwyn.”
Allwyn further praised the decision as a ‘clear and comprehensive judgment’ in favour of its status as steward of the National Lottery, a contract it will hold until 2034.
“This provides clarity and legal certainty, and our focus now is on delivering for players and increasing funding for good causes,” its statement continued. “That means moving faster on innovation such as New Lotto and Powerball, which we announced earlier this week.
“It also draws a line under a long-running series of allegations about the integrity of the competition process, many of which were withdrawn during the proceedings, with the remainder rejected by the court.”