Allwyn last night moved one step closer to its takeover of the UK’s national lottery after current operator Camelot withdrew its appeal against a key decision to award the new licence to its rival.
The UK Gambling Commission controversially awarded its fourth licence to run the UK lottery to the Czech operator in March — a move Camelot challenged in the courts.
Camelot had challenged both the decision to give Allwyn the lottery licence and the Gambling Commission's procurement process.
A High Court hearing later this month was set to hear an appeal over the suspension of the transition process to allow the smooth takeover of running the lottery in February 2024.
But in a statement last night, Allwyn said: “Camelot has withdrawn its legal challenge to an earlier court ruling and will no longer pursue the case to the Court of Appeal next week.
“This removes an important obstacle to the UK Gambling Commission signing the enabling agreement with Allwyn that will allow the transition process to begin, ahead of the new licence period beginning in February 2024.”
The news was confirmed by the Gambling Commission, which published a statement noting it had "received correspondence from Camelot indicating that they intend to withdraw their appeal and pursue their claim in damages only".
In June, a court ruled an automatic suspension preventing the UK Gambling Commission from entering into agreements with Allwyn Entertainment to commence the transition process should be lifted.
That ruling was appealed by Camelot UK Lotteries Limited and Camelot Global Lottery Solutions Limited and International Game Technology (IGT), resulting in the suspension continuing.
Last night Allwyn said that Camelot had withdrawn its appeal against the ruling to allow the transition to continue and that Allwyn International had agreed to waive all claims for costs or damages against the Camelot Entities.
However the Gambling Commission statement noted that it had so far received no update from IGT and that the handover suspension would continue until the supplier formally drops its case.
A spokesperson for Camelot confirmed to VIXIO GamblingCompliance on Tuesday morning that it had shelved its appeal, citing too great a risk to money for good causes posed by a long-term suspension.
“It has become clear that the potential damages covered by the undertakings needed for the appeal to proceed would have been too large, and involved too great a commercial risk, for it to be reasonable to provide them," they said.
“For that reason, Camelot has decided to withdraw its appeal in relation to the lifting of the suspension and Allwyn has agreed not to pursue any damages against Camelot in relation to the undertakings given in July. Camelot is no longer seeking to prevent the Enabling Agreement being signed prior to the Procurement Trial which will now take place in January/February.
“In accordance with its duties as the operator of the third Lottery licence, Camelot will now cooperate with Allwyn and the Gambling Commission to facilitate an orderly transition to the fourth licence.”
In its statement Allwyn added: “Allwyn very much welcomes this decision and looks forward to cooperating with Camelot and the Gambling Commission on the transition process.
“Allwyn is excited at the prospect of becoming the custodian of Europe’s biggest lottery.”
Camelot, which is owned by Ontario Teachers’ Pension Plan, wrote to the Gambling Commission in March after it had been narrowly defeated by Allwyn Entertainment, which is controlled by Karel Komarek, 53, a Czech billionaire.
Camelot, which was named “reserve applicant”, is understood to have asked the gambling regulator to justify its decision after it emerged that it had scored more highly than Allwyn on almost every measure. In the run-up to the announcement of the lottery decision, both Allwyn and Camelot had appointed lawyers in preparation of legal challenges to the result.
Camelot argues the way a “risk factor” was applied to the contestants’ bids was wrong and benefitted Allwyn’s ambitious bid.
Allwyn had pledged far higher returns to good causes — around £38bn over the ten-year licence — 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. 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.”
There had been concerns that any further delay in the transition process would mean there could be a delay in the running of the lottery, with a potential suspension of the game.
The Gambling Commission has warned in court filings that more than £1bn for good causes could be lost over legal action alleging the new licence to run the national lottery was awarded unlawful.
In a legal submission obtained by the Observer newspaper, it said: "In the worst scenario, there will be a gap in service between the expiry of the third licence on 31 January 2024 and the commencement of the fourth licence.
“The commission anticipates there will be an overall shortfall of payment to good causes of at least £1bn and, in the case of an interregnum, considerably more.”
In an interview last weekend, Allwyn Chief executive Robert Chvatal said he was planning to rejuvenate the UK national lottery with a digital revamp, including using new technology and a makeover for scratchcards.
Additional reporting by Joe Ewens