Media mogul Richard Desmond has been forced to wind-down one of his legal challenges against the National Lottery’s current contract and stewardship.
On Friday, the Competition Appeal Tribunal (CAT) dismissed claims that Camelot Group, now owned by Allwyn UK, had received an unlawful £70m marketing subsidy from the UK Gambling Commission (UKGC).
As plaintiff, Desmond sought to classify the £70m retention awarded by the Contract of the National Lottery as an unfair or unlawful treatment that created an economic disadvantage to Desmond’s lottery businesses operated by Northern & Shell.
Filed as “The New Lottery Company Ltd & Ors v Gambling Commission 2026”, the CAT Tribunal of Justice, Bacon, Tidswell and Ridyard rejected the claim brought by the Lottery companies owned by Desmond including The New Lottery Company, Northern & Shell and The Health Lottery.
The Justices found no legal grounds to contend that the Gambling Commission’s approval of Camelot’s 2023 marketing investment breached the Subsidy Control Act 2022.
The Applicants argued that allowing Camelot to retain £70m in funds that would otherwise have been paid into the National Lottery Distribution Fund (NLDF) amounted to unlawful financial assistance over existing competitors.
As the Tribunal recorded: “The Applicants allege that this sum of £70.21m constituted a subsidy within the meaning of section. 2 of the SCA.”
However, the CAT firmly rejected that contention, placing the evidential burden squarely on Desmond’s companies: “It is common ground that the burden of establishing that the Decision constituted a subsidy rests upon the Applicants.”
Of significance, the New Lottery Company had been an unsuccessful bidder for the fourth National Lottery contract. Had its bid been successful it would have benefitted from the tender’s reward fund.
CMO principle central — and satisfied
At the heart of the dispute was whether the Gambling Commission’s decision breached the Commercial Market Operator (CMO) principle, viewed by legal observers as the UK equivalent of the EU’s market economy operator test.
Desmond’s legal team argued that because the National Lottery operates as a ‘statutory monopoly’, there could be no genuine ‘market comparator’ and therefore the “CMO principle should not apply.”
“The decisive question in such a case is whether the State intervention can be assimilated to or is comparable to that of a private operator. If so, the question is then whether the intervention was consistent with normal market conditions, on the basis of the objective and verifiable evidence available.”
The Tribunal rejected that argument outright: “The absence of an actual market comparator does not preclude the application of the CMO principle.”
The judges went further: “We therefore reject the Applicants’ contention that the market economy operator principle… should not apply in circumstances where there is no actual market comparator.”
Instead, the correct question was whether the Commission’s conduct could be assimilated to that of a rational commercial operator. In doing so, the Tribunal reaffirmed the high threshold required to establish unlawful advantage:
“The law recognises that there is a wide spectrum of reasonable reactions to commercial circumstances in the private market.”
The Commission’s decision — taken following econometric scrutiny, independent expert advice and a reduction of Camelot’s original £89.6m marketing request — was found to fall within that permissible commercial margin.
“Given the conclusion we have reached that the Decision did not confer a subsidy on any of the Interveners, as a consequence of the application of CMO principle, it is not strictly necessary to consider the issues between the parties relating to relief.”
Statutory duty to maximise good causes returns
Desmond’s companies also argued that the retained funds represented public resources “forgone” from good causes.
The Tribunal instead emphasised the Commission’s statutory duty under the National Lottery etc. Act 1993:“The overriding duties of the Respondent… include the duty to do their best to ensure that the net proceeds of the National Lottery are as great as possible.”
The marketing investment mechanism under Condition 23 of the Third Licence was designed precisely to increase ticket sales and enhance long-term returns to good causes not to confer an operator advantage.
“Considerable effort was put into establishing that funds which were retained by Camelot and invested in marketing, instead of being remitted to the Respondent, would in turn generate sufficient additional ticket sales to create a net benefit to the NLDF and thereby a net increase in contributions to good causes.”
Samantha Ward, Partner at Clifford Chance advising Camelot and Allwyn, said: ‘We are delighted with the Tribunal’s judgment in what is only the third subsidy control challenge brought under the Subsidy Control Act 2022.
The Tribunal has confirmed that no subsidy was provided by the Gambling Commission to our clients Camelot or Allwyn. The judgment provides important guidance on the application of the “commercial market operator principle” under the Subsidy Control Act, particularly in circumstances where no actual market comparator exists, and also reiterates the critical importance of bringing subsidy control challenges promptly after becoming aware of the decision being challenged.’
Desmond maintains campaign against Allwyn
The Tribunal further indicated that even if Desmond’s companies had succeeded substantively, their claim faced procedural difficulties due to delay. Under the statutory framework, relief may be refused where: “there has been undue delay in making the application.”
The Decision was published in August 2023, while proceedings were not issued until May 2025 — nearly two years later.
The case forms part of Desmond’s broader legal campaign following his unsuccessful bid for the Fourth National Lottery licence. His New Lottery Company remains engaged in separate High Court proceedings challenging aspects of the fourth contract awarded to Allwyn in March 2022.
The Tender gave Allwyn UK a two-year concession to begin its stewardship of the National Lottery as a of February 2024. The period saw Allwyn acquire Camelot Group UK operations from the Ontario Teachers Pension Fund in Febuarary 2023, to enable the transition of the contact by its 2024 start date.
Throughout the CAT litigation, Desmond-affiliated entities attacked both Camelot’s econometric modelling and the Commission’s scrutiny of the 2023 marketing proposal. Ultimately, however, the Tribunal concluded that the decision fell within rational commercial boundaries and did not amount to unlawful subsidy.
For the UKGC and Allwyn, the judgment provides judicial confirmation that the LNIO mechanism and joint marketing financing arrangements under the Third Licence are compatible with the UK’s post-Brexit subsidy control regime.
For Desmond, it marks a significant legal defeat and a further narrowing of avenues through which to challenge the Lottery’s regulatory and commercial framework.