The UK Gambling Commission is preparing to settle a £200 million legal claim from media tycoon Richard Desmond in relation to the award of a National Lottery licence, with the aim of resolving a dispute that has hampered technological upgrades.
The UK gambling regulator is reportedly moving to settle a £200 million damages claim made by media mogul Richard Desmond over the operation of the National Lottery. The Gambling Commission has requested a mediation meeting with Mr Desmond’s company, Northern & Shell, to propose an out-of-court solution to the legal dispute. This meeting is expected to take place in the coming weeks.
While the settlement aims to address the substantive claim, it is believed that the final agreement may not reach the full £200 million that Mr Desmond initially sought.
The decision to pursue settlement stems from growing concerns that the ongoing legal battle is complicating efforts to modernize the technology systems underpinning the National Lottery, the UK’s largest distributor of charitable funds.
Mr Desmond took the case to the High Court after the Gambling Commission awarded a fourth National Lottery license to Czech operator Allwyn, beating bids from Northern & Shell and the current operator, Camelot, which has been running the lottery since its inception in 1994.
Alwyn, controlled by billionaire gas tycoon Karel Komarek, took control of the lottery in February. However, her tenure has been beset by difficulties, including delays in switching to a new technology provider. The company’s plan to introduce a new IT system has been repeatedly postponed, with further delays expected.
This technology overhaul is crucial to Allwyn’s strategy to launch new games and double the Lottery’s contributions to charitable causes from £17bn to £34bn over the 10-year license period.
It is understood that the Gambling Commission’s desire to settle is partly due to expectations that the IT upgrade deadline will need to be extended again. Officials are said to be reluctant to grant another extension while Mr Desmond’s legal action is still pending, fearing it would strengthen his claim that the granting of the license to Alwyn was a mistake and that the auction process was flawed.
In February, Northern & Shell sued the Gambling Commission over its decision. During a High Court hearing in June, the company described the licensing process as “seriously flawed”, accusing the commission of giving “unfair preferential treatment to Alwyn”. Mr Desmond has previously questioned Alwyn’s suitability, saying they had “no UK experience”.
Industry experts point out that Allwyn’s new systems should have been operational when it received the licence. Robert Chvatal, CEO of Alwin, had warned of potential delays even before the transition period. The company has missed its summer deadline and is now said to be targeting February 2025, although insiders believe this may be pushed back further, which could impact donations to good causes.
Alwyn has attributed some of the setbacks to a legal dispute with his previous IT provider, International Game Technology (IGT). Although IGT’s legal challenge was rejected by the Supreme Court in 2023, the company continued to seek damages until January this year.
Extended delays could hamper Allwyn’s ability to achieve her ambitious fundraising goals. The company is already below sales expectations, with turnover expected to be well below the £8.2bn achieved by Camelot in its final year.
The National Lottery remains one of the most lucrative public sector contracts in the UK and the largest source of funding for sport, heritage and charitable causes across the country.
A Gambling Commission spokesperson said: “In accordance with the court order, the parties must at all stages consider settling this litigation by any alternative means of resolving the dispute. Naturally, the Commission will continue to take those requirements into account.”
An Allwyn representative commented: “We are investing over £350 million in the largest technology upgrade in the history of the National Lottery, working to transition from existing legacy systems to our new modern platform. Once deployed, we will be able to change the way customers play.” The National Lottery, more importantly, generates more revenue for charitable causes.
A spokesman for Mr. Desmond declined to comment.
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