There has been some speculation recently that Camelot, the current operator of the UK National Lottery, may launch a legal challenge after losing the right to continue running the lottery. In March 2022, the Gambling Commission announced that it had awarded the next National Lottery licence to Allwyn Entertainment, a Czech company, instead of Camelot who have run the lottery since its inception in 1994. This decision has raised questions about whether Camelot will accept the outcome or potentially take legal action.
Background on the National Lottery tender process
The licence to operate the UK National Lottery is awarded by the Gambling Commission through a competitive tender process that takes place every 10-15 years. Camelot was awarded the first licence in 1994 and has had it renewed three times since then, most recently in 2012. However, in 2021 Camelot faced stiff competition for the fourth licence from 2021-2032.
Four bidders made it to the final stage – Camelot, Allwyn, Sisal and Mediadelta. Each bidder had to demonstrate how they would grow returns to good causes, innovate the portfolio of games, and promote player protection and excellence in management if they were awarded the licence.
In March 2022, the Gambling Commission announced that Czech group Allwyn had won the right to run the lottery from 2024, ending Camelot’s 28-year hold on the franchise.
Reasons behind the decision to award Allwyn the licence
The Gambling Commission stated that Allwyn had committed to increasing contributions to good causes by £36 billion over the next decade. This was seen as a key factor in awarding them the licence.
Specifically, Allwyn pledged to:
- Increase returns to good causes to £9.5 billion by 2032
- Grow contributions by boosting sales and controlling costs
- Deliver growth through product innovation and strategic partnerships
- Make the National Lottery brand “fresh” and “contemporary” to increase relevance and appeal
The Gambling Commission chair said that Allwyn had demonstrated “the highest standards of player protection alongside innovative ideas that can capture the imagination of existing and new players.”
Other factors that may have swayed the decision include:
- Allwyn’s focus on digital innovation and leveraging technology
- Their data capabilities and CRM strategies for improving player experience
- International experience running lotteries in Europe
- Fresh ideas from a new operator after 28 years of Camelot leadership
Camelot’s response to losing the National Lottery licence
Camelot expressed disappointment at the decision and initially indicated they were considering whether to challenge the result. In a statement, Camelot said they were “shocked” and “surprised” to have lost the licence after running the National Lottery successfully for 28 years.
Some key points from Camelot’s initial response:
- They believed their proposal offered the “best long-term value to taxpayers and would have delivered over £15 billion more to good causes.”
- They suggested it was an “extraordinary decision” to award the licence to an unproven organisational setup with no technology or infrastructure in the UK.
- They stated the Gambling Commission spent an “unprecedented amount” of time scrutinising Camelot but not enough time understanding Allwyn’s new business model.
- They argued that Allwyn’s projections for returns to good causes were “highly uncertain” and not necessarily better than what Camelot offered.
This initial reaction opened the door for Camelot to potentially launch an appeal or legal proceedings.
Reasons why Camelot may decide to legally challenge the decision
There are several reasons why Camelot could decide to pursue a legal route to try and overturn the Gambling Commission’s decision:
- They have a strong 28-year track record running the National Lottery successfully.
- They believe their bid offered substantially higher returns to good causes.
- Concerns that Allwyn’s projections are unrealistic and unproven.
- Dissatisfaction with how the bid process was conducted and how the bids were evaluated.
- Sunk costs already invested in preparing their bid and transition planning.
- Want to retain their experienced staff, operations and network of partners.
- Dispute the argument they are no longer an innovative lottery operator.
- View Allwyn as lacking sufficient experience and having operational risks.
With so much at stake, including staff jobs and Camelot’s reputation, the company may decide the lengthy and costly process of a legal challenge is worth it to try and overturn the outcome.
Analysis of Camelot’s chances of success with legal action
It is difficult to assess Camelot’s likelihood of success if they do proceed with seeking a judicial review or appeal of the licence decision. Some analysis suggests their case could face challenges:
- Courts are usually reluctant to intervene in matters of commercial judgement for regulators and contracting authorities.
- The Gambling Commission ran a detailed and lengthy competitive process according to required procurement regulations.
- Camelot’s argument that Allwyn’s bid projections are unrealistic may not be sufficient grounds alone to overturn the decision.
- The projected increase in good cause contributions was a key criteria, which Allwyn scored favourably on.
However, if Camelot can show evidence of any procedural unfairness, bias or lack of transparency in the bidding and evaluation process, they may gain more traction with a legal challenge.
Overall assessment is that Camelot are likely to face an uphill battle if they pursue legal action, unless they can demonstrate substantive flaws in how the licence process was administered. But the high stakes involved still make a legal avenue worthwhile for them to explore.
Precedents of legal action over National Lottery licences
There is some precedent of legal challenges being lodged, though not ultimately successful, when a incumbent National Lottery operator has lost its licence:
- In 2000, Camelot challenged the decision to award the second National Lottery licence to Richard Branson’s Virgin Group. Camelot sought a judicial review, arguing the process was unfair and not properly evaluated. The court rejected Camelot’s case, allowing the licence award to Virgin to stand.
- When Camelot regained the licence in 2012 after losing it in 2007 to Sir Richard Branson’s Virgin consortium, two losing bidders – Sugal & Damani and Master Draw – filed applications to the High Court to contest the decision. However, neither case was successful in overturning the licence award to Camelot.
So while legal avenues have been explored previously by aggrieved lottery operators, the results suggest the courts are generally unwilling to interfere with the regulator’s commercial judgement in these situations.
Potential impact if Camelot pursued a legal case
If Camelot did lodge formal legal proceedings, there could be some potential impacts and implications while the case was underway:
- It may delay Allwyn taking full operational control by the target date of February 2024.
- There could be disruptions and uncertainty for employees, partners, vendors, and good causes dependent on lottery funding.
- The National Lottery brand could suffer reputational damage from the controversy and negative publicity.
- Sales and revenues could dip during any transitional limbo period.
- Camelot and Allwyn could incur significant legal costs defending their positions.
- Allwyn’s plans for growth and innovation could be temporarily derailed.
Ultimately, a protracted legal dispute could jeopardize the National Lottery’s ongoing operations and financial health. This risk of instability and uncertainty may factor into Camelot’s decision whether to pursue legal options.
Recent updates on Camelot’s position
In April 2022, Camelot provided an update on their stance regarding the licence decision. In a statement, they confirmed that “with heavy heart” they had decided not to formally appeal the decision.
The key reasons given for this position were:
- The lengthy appeal timeframe extending into 2024 would be destabilizing and make transitions harder for employees and partners.
- Pursuing litigation would be costly and an “unnecessary distraction” at a time of major change.
- Wanting to avoid reputational damage from a contested appeals process.
- Respecting the Gambling Commission’s right to award the next licence as they see fit.
Camelot reiterated their disappointment at losing the licence but said that with no quick legal fix available, the focus now had to be on working constructively with Allwyn on the transition over the next two years.
So despite some earlier threats of potential legal action, Camelot seem to have accepted that court challenges could do more harm than good at this stage. They appear unwilling to risk the negative consequences of trying to overturn the Gambling Commission’s decision through appeals.
Allwyn’s response to Camelot legal challenge speculation
For its part, Allwyn has previously declined to comment in detail on Camelot’s hints of potential legal action. After being named the preferred bidder in March 2022, Allwyn simply noted that it was aware that Camelot may consider a challenge but said it hoped any process would be swift and smooth.
More recently, after Camelot confirmed it would not be formally appealing the licence award, Allwyn provided the following statement:
We appreciate that this decision was difficult for Camelot. Our focus will remain on working with Camelot during the transition period…We are fully committed to delivering the best possible National Lottery for all stakeholders.
This measured response suggests Allwyn is trying not to be confrontational and simply proceed with assuming control of lottery operations. The lack of any legal challenge clears the way for Allwyn to implement its growth plans without further delays or uncertainty.
Allwyn previously stated it wants to “rejuvenate” the National Lottery brand and make its games more contemporary and relevant. The company will likely be relieved to have a straightforward passage to launching its new vision rather than facing the distraction of a Camelot legal appeal.
Conclusion
In the end, Camelot has decided not to pursue court appeals after losing the right to continue running the UK National Lottery, which they have operated since its inception in 1994.
While Camelot initially indicated legal options were on the table and they were shocked at losing the licence renewal, the company ultimately determined that the risks and uncertainties of a challenge outweighed any potential benefits.
After careful consideration, Camelot felt beginning the transition process and working constructively with new licensee Allwyn was preferable to attempting to overturn the result through litigation. This will allow Allwyn to press forward with implementing operational changes and its plans to reinvigorate the brand.
Based on precedents with past licence decisions, Camelot likely realized there was no guarantee a legal appeal would succeed. Despite their impressive legacy with the lottery, Camelot appear to have accepted that their time in charge has run its course.
While the company is clearly disappointed not to continue in the role, any disruptions and instability that could arise from a contested appeals process were seen as untenable.
For Allwyn, they can now look ahead to fully taking the reins in 2024 and launching their proposals to increase returns to good causes and make the National Lottery relevant for modern audiences. The speculation around legal action from Camelot can now be firmly put to rest.
