Desmond to launch legal challenge of National Lottery contract

British media tycoon Richard Desmond will launch a legal challenge against the UK Gambling Commission (UKGC) seeking multi-million-pound damages over how the regulator handled the tender of the Fourth National Lottery Licence Competition.

Desmond, the Founder and Chairman of the UK media group Northern & Shell, alleges that the Gambling Commission made “numerous manifest errors” during the bidding process.

As reported by The Guardian, Desmond will invoke EU laws on unfair competition practices to challenge the UKGC’s awarding of the 10-year National Lottery license to Allwyn UK, which is scheduled to become the Lottery’s new operating firm in February 2024.

Desmond alleges multiple flaws in the ‘secretive auction process’ through which the UKGC assessed Northern & Shell against those of rivals Allwyn and Camelot, the latter being the steward of the lottery since its inception in 1994.

National Lottery bids were assessed by the National Lottery Competition Committee, chaired by Stephen Cohen, who deemed Northern & Shell’s bid as speculative when compared against the technical aptitude and strategic planning of Allwyn and incumbent Camelot.

Sources close to Northern & Shell told the Financial Times earlier this month that Desmond would seek up to £200m in damages from the Gambling Commission.

Northern & Shell’s claim hinges on the Gambling Commission’s alleged failure to comply with EU law related to the procurement of government contracts, as stipulated by the ‘2018 EU Withdrawal Act’ – maintained as British law following Brexit.

The assessment of Northern & Shell’s bid was rejected, in which the company cites that it had “substantial financing from leading financial institutions, including HSBC, Barclays, and Société Générale,” underscoring its seriousness.

Northern & Shell said the company was bringing the claim “because it believes there are serious public interest questions to be answered as to how the lottery contract was awarded. As an aggrieved bidder, it has been advised that it is entitled to seek full damages.”

Prior to the competition, Desmond was an outspoken critic of the National Lottery, lambasting the UK government for allowing the sale of Camelot to the Ontario Teachers’ Pension Plan (OTPP) in 2010 for £400m. Northern & Shell maintains an interest in UK gambling, as the operating firm of the ‘Health Lottery,’ raising money for charities supporting local health and welfare services.

There is concern that successful litigation could deprive charities and social enterprises of significant funding. Conservative MP Damien Moore has urged Desmond to drop the lawsuit – “The National Lottery just needs to be given the space to get on with things now. 

“Of course, this process is complex, but I’m tired of seeing legal challenges, which, if successful, could see wealthy businesses depriving British charities and social enterprises of hundreds of millions of pounds.”