The ongoing legal battle over the UK National Lottery could see it suspended for the first time in its 30 year history, the Gambling Commission has warned.
The Gambling Commission said a legal challenge by Camelot against its loss of the lottery licence earlier this year could delay the handover to its rival Allwyn on February 1, 2024.
In evidence to the High Court, John Tanner, the commission’s executive director, warned the Camelot appeal could cause the Czech-based operator Allwyn to have insufficient “implementation” time.
He said that could lead to a “real risk that there will be a period when the National Lottery does not operate at all”.
The commission is seeking to reverse a court decision to suspend the handover process, pending the outcome of the legal challenge by Camelot, after Allwyn was named the preferred applicant for the fourth licence in March.
Current lottery operator Camelot claims the commission got its decision “badly wrong,” and it will effectively be put out of business.
In court submissions seen by The Telegraph, the commission warned that Allwyn needed at least 19 months to prepare for and complete taking over the lottery operation. This would require it to start in June or July at the latest.
In his submission, Tanner said that as long as the commission is prevented from entering into an “enabling agreement” with the new operator there is a serious risk of disruption to the lottery.
He said: “While the commission is prevented from entering into the enabling agreement with Allwyn, both the commission and Allwyn will suffer significant prejudice in being unable to commence important steps towards commencement of the fourth licence.
“This will almost certainly mean that, as a minimum, the National Lottery does not operate to its full potential at the start of the fourth licence term.
“Further, there is a real risk in these circumstances that there will, following the end of the third licence, be a period where the National Lottery does not operate at all.”
He added that “there would be no contributions to Good Causes during any period where the National Lottery is not operating”.
“The interests of participants would be jeopardised in that winners in National Lottery games under the Third Licence [held by Camelot] may be unable, after the expiry of that licence, to claim prizes.”
Camelot and Allwyn will have to agree a process to honour “millions of outstanding prizes” and have ring fenced funds available to ensure no-one loses out, according to the regulator.
In its application, Allwyn proposed a 22-month implementation timespan, including a three-month contingency period. The commission warned that a delay beyond June 30, 2022 would allow Allwyn less than the minimum 19 months needed.
Tanner said: “If the commission is unable to enter into the enabling agreement, it is almost inevitable that material, irreversible harm will be done to the national lottery and good causes and there is a high risk of that harm becoming significant.”
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, 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.”
It added: “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.”
A Camelot spokesman said: “We have made clear in our representations to the Court that we believe there is no threat of suspension of the National Lottery in the period between the third and fourth licences.
“Camelot has proposed a number of possible solutions to the Court — including an interim licence which has already been used in similar circumstances — which remove any such risk.”
Allwyn has admitted sanctions associated with the Russian invasion of Ukraine could affect its business because of its parent company's links to Russian gas giant Gazprom; however, under parliamentary scrutiny it has denied it is especially vulnerable.