New UK Lottery Operator Allwyn Battles Sanction Claims

April 13, 2022
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The UK's next National Lottery operator has admitted sanctions associated with the Russian invasion of Ukraine could affect its business, but denied it is especially vulnerable, amid parliamentary scrutiny.

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The UK's next National Lottery operator has admitted sanctions associated with the Russian invasion of Ukraine could affect its business, but denied it is especially vulnerable, amid parliamentary scrutiny.

Allwyn Entertainment, which was last month named the preferred applicant to run the UK National Lottery from 2024, warned of effects from the Ukraine conflict and related sanctions during a US investor presentation on Monday (April 11).

Questions have been raised in recent months about Allwyn’s parent company's links to Russian gas giant Gazprom.

Its founder, Czech billionaire Karel Komarek, could be in line for a $750m (£572m) payout when he lists Allwyn on the New York Stock Exchange through a special purpose acquisition company (SPAC).

But an investor presentation for Allwyn, seen by the PA news agency, warned: "The conflict between Russia and Ukraine, and related sanctions could negatively impact us."

It also lists under "risk factors" that the conflict could adversely affect operations and has caused "unstable market and economic conditions and is expected to have additional global consequences".

A spokesman for Allwyn said: "The potential impact of sanctions is a standard risk factor that virtually every US listed company with international operations is making in light of the invasion of Ukraine by Russia.

"As is self-evident to any fair-minded person who reads it, the inclusion of sanctions as a risk factor in our New York Stock Exchange listing presentation is a reflection of the current global climate, akin to the possible impacts of COVID-19, not an indication of a specific threat to Allwyn."

Allwyn won the contract for the National Lottery from previous operator Camelot earlier this year after the Gambling Commission awarded a five-year licence to the firm — it is believed largely because of the firm’s promise to increase charitable donations.

The company, previously known as Sazka, runs lotteries in Austria, Italy and Greece, and proposes to cut the cost of UK tickets from £2 to £1.

Current lottery operator Camelot is taking the Gambling Commission to court to appeal the decision to strip it of the licence after 25 years.

Questions of Allwyn have also been raised in parliament, with MPs asking the government what checks have been made to ensure it does not have financial or political ties to the Putin regime.

Shadow culture secretary Alex Davies-Jones asked in the House of Commons last month: "There have been clear concerns raised around the Gambling Commission's decision to appoint the new licence to a company with reported links to Gazprom.

"Given the extremely concerning situation in Ukraine, can the minister confirm he is confident that the new provider has no links to the Russian regime, and if so — why?"

Minister Chris Philp at the Department for Digital, Culture, Media & Sport (DCMS), replied: "The Gambling Commission, as part of their licence award process, have a statutory obligation to make sure that anyone given a licence meets the fit and proper person test."

He added that the Gambling Commission has given him assurances that Allwyn does pass the test and that a security vetting process is under way.

Komarek made much of his fortune from investments in oil and gas after the end of the Cold War, but last month he started to cut links to Gazprom.

Allwyn's parent company KKCG runs a gas storage venture with Gazprom in the Czech Republic, but is looking at ways to end the Russian firm's involvement. The billionaire also condemned the Russian invasion of Ukraine last month.

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