The UK Gambling Commission (UKGC) has been legally challenged over its National Lottery subsidy controls in relation to Allwyn.
Northern & Shell, a competitor for the fourth National Lottery licence, and its subsidiary, Health Lottery ELM, have filed an appeal with the Competition Appeal Tribunal against the UKGC.
The companies argue that the regulator has inadvertently benefited Allwyn, a private entity and current National Lottery operator, with a £70m good causes public grant from the National Lottery Distribution Fund (NLDF).
Although being the official operator since February 2024, Allwyn was first awarded the licence back in September 2022. In between this period, the National Lottery operator was Camelot.
Under Section 22 of the National Lottery Act 1993, licence operators are beneficiaries of the NLDF, which reallocates revenues not paid out as prizes to good causes. Camelot received £70m from the fund in July 2023.
However, the point of discontent from the appellants arises from the fact that Camelot was fully acquired by Allwyn in February 2023, with the former National Lottery operator’s business fully integrated with Allwyn’s.
The appeal now brings attention to the question whether the action created a legal grey area where the government indirectly subsidised a private company’s market advantage through public funding.
Northern & Shell is now asking for the awarding of the subsidy to be overturned, all £70m to be given back to the NLDF, and for the full coverage of legal costs by the UKGC if the case is won.
During the course of the proceedings, investigations will likely analyse whether the UKGC has followed required procedures, whether the £70m grant caused any market disruption, and any possible conflicts stemming from Allwyn simultaneously being the incoming operator and owning the outgoing one.