A high-stakes legal showdown has kicked off over the Gambling Commission’s handling of the fourth National Lottery licence, as the role of financial advisor Rothschild and its prior ties to the winning bidder take centre stage in court. £1.3bn
Media baron Richard Desmond’s group Northern and Shell and its subsidiary, the New Lottery Company, launched legal action against the Gambling Commission last year over the awarding of the latest National Lottery licence.
In 2022, the Gambling Commission held a procurement competition for the upcoming lottery licence, since the previous licence awarded to Camelot Group in 2009 was nearing its expiration.
Desmond’s group took part in the competition but were ruled out in phase one. Czech gambling group Allwyn Entertainment won the new licence.
The decision to award Allwyn the new licence resulted in several lawsuits, including one by Camelot. During the lead-up to a trial, Allwyn agreed to acquire Camelot Lottery Solutions.
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Claims that Rothschild had links to Allwyn
The trial between Desmond’s groups and the Gambling Commission kicked off at the High Court this week. Allwyn is also involved as an interested party.
In its opening written notes, Desmond’s lawyers at BCLP made several allegations against the Gambling Commission, including claiming it committed several breaches of regulations.
The claimants argued that Allwyn repeatedly, systematically, and seriously breached the Media and Communications Protocol through unauthorised media engagement and criticism of the National Lottery brand and the incumbent, Camelot.
It was alleged in their opening statements that the regulator failed to properly investigate this, and it was suggested that this should have led to Allwyn’s disqualification.
Desmond’s lawyers dragged the financial advisor, Rothschild, into their case.
Rothschild was appointed by the Gambling Commission in July 2019 to act as the lead financial consultant/advisor for the fourth National Lottery licence.
However, it was outlined that Rothschild had a prior commercial relationship with Allwyn.
The argument to the court was that the Gambling Commission failed to identify, prevent, or resolve conflicts of interest involving Rothschild, as it had a pre-existing relationship with the winning bidder.
The group previously stated that Northern and Shell has incurred costs of almost £20m in its bid to win the lottery contract and is now suing for alleged loss of profits and wasted bid costs.
Commission says group ‘performed very poorly’
The regulator, in its opening written defence submissions, told the court that Desmond’s group’s bid simply failed to meet the proper competition criteria.
The Gambling Commission’s lawyers at Hogan Lovells said the application for the New Lottery Company failed to meet the mandatory standards in two key areas: Protecting Participants’ Interests (PPI)/Protecting Participants’ Funds (PPF) and Financial Strength.
The regulator told the court that by failing in these areas, they automatically disqualified their bid.
However, the regulator went on to claim that even if the group hadn’t failed, it “performed very poorly” with an overall score of 57.50 per cent, which was much lower than the winning bid, Allwyn, which scored 87.18 per cent, and also lower than Camelot’s score of 85.67 per cent.
As it failed the Pass/Fail Areas, its application was not included in the final ranking of
applicants (Allwyn and Camelot). However, the Gambling Commission added an evaluation of
the New Lottery Company’s position, which showed it would have scored lower than both Allwyn and Camelot.
Regarding Rothschild’s arguments, the Commission denied that a conflict existed and defended the measures it took in accordance with regulations.
The trial opened last Thursday and is running for 29 days, concluding on 27 November, with a judgment to follow at a later stage.