UK lottery regulator rebuked over ‘poorly managed’ licence process

The UK’s gambling regulator oversaw a “poorly managed” competition process to decide the next National Lottery operator, a report by a cross-party group of MPs has concluded.

The Gambling Commission chose Czech-based conglomerate Allwyn as the next National Lottery operator over incumbent Camelot in March, marking the first change of hands in the lottery’s 28-year history following a hotly contested bidding process.

However, Camelot and its technology supplier International Game Technology (IGT) attempted to overturn the decision in court, delaying the licence handover before finally dropping their legal challenge in September.

Allwyn announced on Saturday that it had agreed to buy Camelot in a £100mn deal aimed at easing the transfer of operations before Allwyn officially takes over the 10-year National Lottery licence in February 2024.

The House of Commons digital, culture, media and sports committee said the Gambling Commission had “followed its predecessors in overseeing a poorly managed competition”. The regulator first assumed responsibility for overseeing the lottery in 2013.

MPs also said they were “concerned” by reports that a further legal case, in which Camelot and IGT were pursuing financial damages, could result in up to £600mn being diverted from the National Lottery’s good causes budget.

However, following its takeover by Allwyn, Camelot is expected to drop the case, which is currently scheduled for January 2023, but IGT may still pursue damages worth up to £100mn. IGT did not respond to a request for comment.

The committee called on the Gambling Commission to “review its licence competition design process”.

The report added that the regulator must “vigilantly monitor” Allwyn’s good cause returns “to ensure that fund distributors are not once again short-changed” following growing criticism of Camelot that its profits rose despite falling ticket sales and donations.

In the year to March 31, Camelot raised £1.9bn for organisations, including UK Sport, the Arts Council and the British Film Institute.

“The next licence period has got off to an inauspicious start with perceived flaws in the competition process leading to a compensation claim which could ultimately short-change charities and other good causes that rely on lottery funding,” said Julian Knight, committee chair. “The flaws must be fixed for the future.”

“The Gambling Commission and new operator Allwyn now have the chance to work together to restore the link in the public’s mind between buying a ticket and supporting worthy causes and projects in their local communities,” he added.

The committee also called for the regulator to close the “loophole” that allows lottery participants to bet using a credit card, a practice that is banned on betting sites, and said it should ensure Allwyn pays at least 0.1 per cent of its gross gambling yield to the GambleAware charity.

“We remain resolute that we have run a fair and robust competition, and that our evaluation has been carried out fairly and lawfully in accordance with our statutory duties,” said the Gambling Commission.

Allwyn said many of the DCMS committee’s recommendations “already form part of our plan” for the National Lottery. “Allwyn’s focus will be on growing good causes returns over the course of the ten-year licence, in a safe and sustainable way,” it added.