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National Lottery could be suspended for first time in game's history

·5-min read
lottery camelot - Loop Images/Universal Images Group via Getty Images
lottery camelot - Loop Images/Universal Images Group via Getty Images

A legal battle could halt the National Lottery for the first time in 30 years, depriving good causes and players of millions of pounds, the regulator has warned.

In court submissions seen by The Telegraph, the Gambling Commission said a legal challenge by Camelot against its loss of the lottery licence could delay the handover to its rival Allwyn on February 1 2024.

In evidence to the High Court, John Tanner, the Commission’s executive director, warned it could cause the Czech-based operator Allwyn to have insufficient “implementation” time, resulting in a “real risk that there will be a period when the National Lottery does not operate at all.”

The Commission is seeking to reverse a court decision to suspend the handover process pending the outcome of the legal challenge by Camelot after Allwyn was named the preferred applicant for the fourth licence in March.

Camelot, the lottery operator since its inception in 1994, has claimed the Commission got its decision “badly wrong,” and, in its court submissions, has warned it will effectively put the company out of business and prevent it bidding for other contracts internationally.

However, the Commission warned that Allwyn needed at least 19 months to prepare for and complete the complex process of taking over the lottery operation, the first transfer from one company to another in its 30-year history. This would require it to start in June or July at the latest.

In his submission, Mr Tanner said that as long as the Commission was prevented from entering into an “enabling agreement” with Allwyn to start the “unprecedented and untested” transfer process, there was a serious risk of disruption to the lottery.

He said: “While the Commission is prevented from entering into the enabling agreement with Allwyn, both the Commission and Allwyn will suffer significant prejudice in being unable to commence important steps towards commencement of the fourth licence.

“This will almost certainly mean that, as a minimum, the National Lottery does not operate to its full potential at the start of the fourth licence term.

“Further, there is a real risk in these circumstances that there will, following the end of the third licence, be a period where the National Lottery does not operate at all.”

It said delays could jeopardise players’ prizes and money for good causes. Mr Tanner said: “There would be no contributions to Good Causes during any period where the National Lottery is not operating.

“The interests of participants would be jeopardised in that winners in National Lottery games under the Third Licence [held by Camelot] may be unable, after the expiry of that licence, to claim prizes.”

A typical draw has 500,000 to 1.5m prizes which can be claimed up to six months afterwards. Camelot and Allwyn will have to agree a process to honour “millions of outstanding prizes” and have ring fenced funds available to ensure no-one loses out, according to the Commission.

Even if there was a delay in signing the enabling agreement but no gap in the operation of the lottery, the Commission warned there could still be £1bn less for good causes because of a shortfall in revenues early on being compounded by a loss of interest on the cash.

In its application, Allwyn proposed a 22-month implementation timespan, including a three-month contingency period. The Commission warned that June 30 2022 would be less than the minimum 19 months needed.

Mr Tanner said: “If the Commission is unable to enter into the enabling agreement, it is almost inevitable that material, irreversible harm will be done to the national lottery and good causes and there is a high risk of that harm becoming significant.”

The move is the latest salvo in one of the most heated contests for the lottery licence in its 28-year history. In the run-up to the announcement, both Allwyn and Camelot had appointed lawyers in preparation to challenge the result.

The premise for Camelot’s challenge lies with the way a “risk factor” was applied to the contestants’ bids. In the run-up to the announcement, MPs and rival bidders had questioned whether applying the risk factor, which affected 15pc of the candidate’s final score, would favour the incumbent.

Camelot has since argued that the regulator discounted the use of the risk factor in the final adjudication due to the concerns, allowing the far more ambitious but potentially risky business plan of Allwyn to emerge victorious.

Allwyn had pledged far higher returns to good causes despite plans to halve the price of a ticket for the National Lottery’s main draw.

In its submission to the court, Camelot warned: “The award of the fourth licence to Allwyn would effectively put [Camelot] out of business, and CUKL would likely be wound up in due course.”

It added: “The loss of the UK contract will significantly diminish the Camelot Group's ability to bid for and operate international lottery contracts in the coming years.”

A Camelot spokesman said: “We have made clear in our representations to the Court that we believe there is no threat of suspension of the National Lottery in the period between the third and fourth licences. Camelot has proposed a number of possible solutions to the Court - including an interim licence which has already been used in similar circumstances - which remove any such risk.”

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