UK Gambling Commission’s £200M Lottery Lawsuit May See Settlement 

UK media is reporting that the United Kingdom Gambling Commission (UKGC) is going to offer a settlement in a £200 million ($254 million) lawsuit with a company that unsuccessfully applied to run the country’s National Lottery service.

Northern and Shell, owned by British media mogul Richard Desmond, claims that the recent hiring of Czech lottery service Allwyn to run the National Lottery was the result of a flawed licensing process. 

Sources that spoke to the UK’s The Telegraph newspaper this week said that the gambling regulator is looking to settle in the case. Desmond’s lawsuit is asking for £200 million in damages. However, the source said it was unlikely this is what the UKGC will offer in settlement. 

The sources said the UKGC is seeking a swift resolution, as Allwyn faces struggles completing its promised IT upgrades. The regulator apparently fears more complications could strengthen Desmond and his company’s case if the lawsuit continues. 

The Lawsuit

Czech lottery provider Allwyn was given the contract to run the UK’s National Lottery in September 2022. It was the biggest single public services contract given out by the UK Government, worth some $6.5 billion over 10 years. 

Months later, National Lottery operator Camelot and its partnered game developer International Game Technology (IGT) both filed legal proceedings against the Commission over the tenure process. 

Desmond filed his lawsuit for Northern & Shell later that year. All three companies claimed that the licensing process was unfair, and that competitors other than Allwyn were not given due consideration. 

Nevertheless, in February 2023, Allwyn took over operations of the National Lottery from Camelot. 

IGT and Camelot’s joint lawsuit against Allwyn ended shortly after that in January 2023, when Allwyn bought Camelot out for £100 million. 

During that time, it emerged that Allwyn had — at the time of being granted the license — debts of some £30 million to two Russian state-owned banks. When the two banks were placed on economic sanctions lists by the European Union after the invasion of Ukraine began, Allwyn did inform the UKGC of the situation. 

It also paid the debts back shortly after being granted the license. There was no suggestion that Russian-state actors influenced the licening process or had any sway over Allwyn. 

But, UK politicians were angry they were not explicitly informed of the situation during the licensing process. 

The first round of legal proceedings over the lawsuit from Desmond and his company is set to play out in court in January 2025.

The Potential Settlement 

Sources that spoke to UK media this week suggest the lawsuit could end before getting to that point. 

The UKGC has previously contested Desmond’s claims. Northern & Shell’s application failed several criteria, and the regulator ran “a fair and robust competition” for the contract, it said. 

Northern and Shell has run the Health Lottery in the UK for some 30 years, which specifically supports and health care and medical charities in the UK with a share of its profits.

Desmond has also owned the TV channel Channel 5, the celebrity magazine OK! and the newsp,aper The Express. 

He claimed that Allwyn’s lack of experience in the UK, and large promises of increased charity revenue share, which have so far been delayed, made his company a better candidate. His lawsuit claims £200 million in damages. That’s based on expenses incurred during the licensing process and lost potential revenue.

According to The Telegraph and the source close to the deal, the UKGC is preparing a settlement offer. 

Allwyn is currently seeing delays to its plan to double its revenue, and also the proportion it gives to charity as part of its license. Its planned IT upgrades have seen problems, and it recently asked the UKGC for an extension on that part of the agreement. 

However, the company says it is confident it will deliver its promise of £38 billion raised for charity across the 10-year contract.