High Court rejects Northern & Shell’s £1bn National Lottery claim

(AsiaGameHub) –   The High Court of England and Wales has ruled that there were ‘no mitigating errors’ in the 2022 tender and procurement procedures for the Fourth National Lottery licence.

In a ruling by Justice Joanna Smith, the legal challenge from The New Lottery Company (TNLC) was dismissed. TNLC is the lottery firm established by UK media mogul Richard Desmond‘s publishing group, Northern & Shell.

TNLC had been a competitor against Allwyn and the then-operator Camelot UK for the right to run the National Lottery. The competition was overseen by the Gambling Commission, assisted by an independent board created specifically for the contest.

While the board accepted TNLC’s initial entry in phase one, which involved demonstrating its financial credentials, the company was eliminated in phase two (the scoring stage).

Issues were identified regarding the compliance and technical accountability of its proposal. The board did not score TNLC’s bid in this stage, explaining: “Due to failures in mandatory pass/fail criteria, TNLC’s application was not included in the final ranking of applicants.”

The final round pitted Allwyn UK (formerly SAZKA) against the incumbent, Camelot UK, the Ontario Teachers’ Pension Fund-backed company that had operated the National Lottery since its inception in 1994.

After examining the procurement mechanisms, Justice Smith dismissed TNLC’s assertions that the process was flawed and that Allwyn UK’s victory was unlawful.

End of a long legal road?

Following the announcement of Allwyn’s win, TNLC contested adjustments approved by the Commission that delayed the contract transition. TNLC argued that Allwyn had failed to meet a fundamental tender requirement, a failure it believed the board overlooked to favour Allwyn.

Justice Smith rejected these claims, affirming the Commission’s right to implement necessary changes “in a response to delivery risks”. She noted that transferring a generational contract would necessitate “a compression of time available to achieve transition” to address “ongoing implementation challenges”.

After the decision, concerns were noted regarding the contract transition, and Camelot initiated its own legal action. This claim was later withdrawn when Allwyn UK purchased Camelot UK’s existing operations in February 2023.

This transaction was executed to guarantee that Allwyn would assume control of the National Lottery by February 2024, aligning with the competition’s deadline.

The court completely dismissed this argument, with Justice Smith finding the alleged failings had “no causal relevance to the Process Claim” and thus could not have influenced the competition’s result. She reiterated that TNLC’s application “was not included in the final ranking of applicants” because it did not satisfy mandatory criteria.

Significantly, Justice Smith’s ruling found that the board largely adhered to the tender’s mandate, which focused on selecting a winner based on the “emphasis on delivering returns to good causes while maintaining high standards of player protection and propriety”.

The court was informed that the process was designed to guarantee “a fair and transparent competition, in which all interested parties are on an equal footing,” with integrated oversight mechanisms and independent advisers.

This decision follows a ruling six weeks prior by the Competition Appeal Tribunal (CAT), which dismissed Desmond’s allegations that Camelot UK had once received an unlawful £70m marketing subsidy from the Gambling Commission.

Commission praises milestone decision

All accusations brought by TNLC against the Gambling Commission have now been entirely rejected by the High Court. In a statement, the Commission described the lawsuit as a significant milestone in the National Lottery’s history.

“The judgment gives resounding support to Good Causes by enabling Allwyn, with oversight from the Commission, to continue with their plans of investment in the National Lottery without further distraction,” the regulator’s statement read.

The Commission further stated that the ruling demonstrates its integrity throughout the granting of the Fourth National Lottery Licence and that none of the disputed licence modifications violated procurement rules.

“Our priority remains to continue regulating The National Lottery for the benefit of participants and Good Causes.”

In a statement provided to SBC, Allwyn echoed the High Court’s position that: “The Gambling Commission ran a fair and lawful licence competition, properly awarding the Fourth National Lottery Licence to Allwyn.”

Allwyn also lauded the decision as a ‘clear and comprehensive judgment’ that supports its role as the steward of the National Lottery, a contract it will maintain until 2034.

“This provides clarity and legal certainty, and our focus now is on delivering for players and increasing funding for good causes,” its statement continued. “That means moving faster on innovation such as New Lotto and Powerball, which we announced earlier this week.

“It also draws a line under a long-running series of allegations about the integrity of the competition process, many of which were withdrawn during the proceedings, with the remainder rejected by the court.”