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The Gambling Commission has selected Allwyn Entertainment as its preferred applicant for the fourth National Lottery licence in a major blow for Camelot.

Camelot looks set to lose its grip on the UK’s National Lottery contract for the first time ever, having managed the competition since its inception in 1994.

The regulator’s decision has triggered a legal standstill period of at least 10 days before a 22-month transition towards the fourth licence, which will begin in 2024.

Allwyn – previously known as Sazka Group – was one of four bidders alongside Camelot, Italian operator Sisal and New Lottery Company Ltd, led by media tycoon Richard Desmond.

Gambling Commission CEO Andrew Rhodes said: “In its lifetime, the National Lottery has raised more than £45bn for good causes and is rightly seen as a great national asset.

“Our priority was to run a competition that would attract a strong field of candidates. Having received the most applications since 1994, it is clear that we’ve achieved just that.

“I am confident that the success of the competition will lead to a highly successful fourth licence – one that maximises returns to good causes, promotes innovation, delivers against our statutory duties, and which ultimately protects the unique status of the National Lottery.

“We look forward to working with all parties to ensure a smooth handover,” he added.

A smooth handover may not materialise, however. Both Allwyn and Camelot are understood to have recruited legal specialists to challenge an unfavourable decision.

The Gambling Commission selected Camelot as its preferred reserve applicant, should Allwyn not be able to fulfil its contractual duties for any reason.

Camelot CEO Nigel Railton said: “I’m incredibly disappointed by today’s announcement, but we still have a critical job to do – as our current licence runs until February 2024. We’re now carefully reviewing the Gambling Commission’s evaluation before deciding on our next steps.”

Allwyn was founded by Czech billionaire Karel Komarek. It has previous experience of running lotteries in Austria, Greece, Cyprus, Italy and the Czech Republic.

The company rebranded from Sazka to increase its chances of being awarded the contract and spent a fortune on assembling a heavy-hitting executive and lobby team led by Sir Keith Mills, who was influential in seeing the 2012 Olympic Games awarded to London.

Allwyn said in a statement: “Our proposal was judged to be the best way of growing returns to good causes by revitalising The National Lottery in a safe and sustainable way.

“The appointment of Allwyn will breathe fresh life into The National Lottery. In Allwyn, the Gambling Commission has selected a strong team with an impressive track record of improving lotteries.

“We will immediately work to deliver our comprehensive transition plan and look forward to transforming The National Lottery, making it better for everyone.”

Former Sainsbury’s CEO Justin King will now be appointed chair of lottery operations at Allwyn.

The decision was described by the operator as a welcome signal to businesses in Europe who are considering investing in a post-Brexit Britain.

King said: “I’m delighted that Allwyn’s proposal has been deemed the strongest to grow good causes in the safest and most sustainable way possible.

“The Gambling Commission has run a lengthy and detailed process and I’ve been extremely impressed by the attention they have paid to the challenges facing The National Lottery over the coming decades.

“The National Lottery is a vital British institution and we’re focused on ensuring it plays an even bigger part in society by increasing participation, improving safeguards and giving back more to good causes,” he added.

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