Jari Vähänen: And the winner is Allwyn – or is it?

Lottery Daily contributor Jari Vähänen examines the result of the fourth National Lottery licence competition, won by Allwyn
Image: Jari Vähänen

UK Gambling Commission announced two weeks ago that they named Allwyn as the best candidate (preferred applicant) to get the national lottery license. The choice came as a slight surprise, especially since a few weeks earlier, there was a rumor that Camelot was going to get that valuable license. In addition to Allwyn and Camelot, SISAL and The New Lottery Company (Desmond / The Health Lottery) also participated in the actual license bidding process.

The lottery license bidding process was now held for the fourth time. For the first time, I was able to take part in this process in a small role. Although I knew that the license is a huge financial issue, I had not previously realized how much work the participating companies had to do. Preparing for and participating in the process takes dozens of people’s work time over a few years. That makes it easy to understand why it has been difficult to get participants in the previous biddings. Four companies they had this time is a record number of applicants.

The UK can be pleased to include such a high-quality group of applicant companies. I have been honored to work with Camelot, SAZKA (now Allwyn), and SISAL, and I’m confident that all of those companies would be able to run the UK Lottery. My knowledge of Desmond’s new company is incomplete, so I can’t comment on their ability. The Health Lottery wouldn’t have been the right choice, but as far as I know, they were just a part of The New Lottery Company in this process.

The competition is now basically over, and the winner has been chosen, but the process itself is not complete. No formal selection has yet been made, and Camelot has already announced that it will appeal to the High Court. That is by no means the first time this has happened. The competition has now been held four times, and Camelot has been a licensee since its inception (1994). Camelot had lost the bidding once before when Virgin was chosen as the winner. However, Camelot managed to win the legal battle over the matter and was allowed to continue in the early 2000s as a lottery license holder. It will be interesting to see if history repeats itself and the same thing happens again.

The appeals process is likely to take time and cause annoyance, at least for the now-chosen Allwyn, who will not be able to begin complete preparations to take action until the High Court has ruled on the matter. The new operator is scheduled to start operations less than two years after the decision is confirmed. In practice, therefore, the current goal is for Allwyn to take over the UK Lottery in early 2024. At least, I can’t tell how long a possible legal process will take, but when it comes to a decision made by the High Court, it’s pretty seldom a quick and easy matter.

I don’t want to comment on whether or not Camelot’s complaint is well-founded. Instead, the interesting question is whether Camelot is a bad loser or why it starts arguing. The decision has certainly been a big disappointment for the current licensee. Although the owner of Camelot now also has an Irish Lottery license, for Camelot, this loss could mean the end of the whole business, in which case it is natural that the matter will be fought to the end. It is also a huge financial issue. Camelot UK has generated around € 3 billion a year for good causes. According to unofficial data, the UK Lottery is expected to generate approximately € 40 billion in revenue over the next ten years. The license holder’s own operating income is also very high. Of course, it is not pleasant to give up big money voluntarily.

UK Gambling Commission has said that they seek growth in the lottery in order to raise more funds for good causes. The goal is for the new licensee to be able to renew both lottery products and sales channels. The aim is, therefore, to seek innovations. As I have already said, I have been able to work with both Camelot and SAZKA, and I know that both of these companies have made significant efforts to develop their operations. Although the emphasis has been very different, it is mainly due to Camelot’s much more limited business scope. However, in the spirit of the times, the Commission emphasizes that reforms must happen in the framework of the protection of participants and propriety and the unique status of the National Lottery.

Under the new license terms, the licensee will have more responsibility for being able to generate the revenue it has declared in the tender for good causes. Camelot has been criticized in public for the fact that although the volume of gaming has increased during the past licensing period, revenues have not developed at the same pace. The Commission is now trying to avoid a similar development. On the other hand, the new licensee is promised significantly more flexibility to allow the operator to respond to change needs and introduce, for example, new technologies and products that customers want to use. That will significantly improve productivity.

As I said in a column I wrote a few months ago, the bidding process is interesting if you look at it from the perspective of the European Lottery world. Three of the four participants, Camelot, SAZKA (Allwyn), and SISAL, have been actively involved in, e.g., the European Lotteries organization. Camelot is filing a lawsuit against the Gambling Commission, so Allwyn has nothing to do with it. On the other hand, Camelot has quite strongly questioned the relations of Russia, the Czech capital owner of Allwyn. That may already cause more permanent problems between companies but may not be relevant in the future if Camelot ceases to exist altogether. It is also interesting to note that only The New Lottery Company has its roots in the UK of the four companies involved in the process. Canadians own Camelot, Allwyn/SAZKA is from the Czech Republic, and SISAL is from Italy.

This time I’m ready to make a prediction. Camelot takes the license case to the High Court for the decision but eventually will lose the lawsuit. Allwyn will receive the lottery license and be able to start operations later than planned – perhaps in early 2025. Allwyn will leverage the existing National Lottery retail channel as well as a large portion of Camelot’s current staff. However, Allwyn needs to show change prominently, so there will be a significant new lottery product, investments in customer data and relationship management, and digital channel. It might be possible that Allwyn will launch non-lottery products sold in the retail channel. It will be clear how right I was in a year or two. In the meantime, I’ll pick up the popcorn and follow the upcoming lawsuit with interest.

Jari has enjoyed a long and successful career in the gambling sector, having cut his teeth in the horse racing and betting business. He has spent the biggest part of that time with Veikkaus, the Finnish national lottery and gambling operator, where he was responsible for horse and sports betting business. While there he started digital sale channels, introduced the first customer-based strategy and took care of international relationships and businesses. Having resigned from the lottery in spring 2020, he established The Finnish Gambling Consultants Ltd and is now helping lotteries and other gambling operators and suppliers to further develop their businesses.