The government keeps telling us that they are desperate for economic growth and keen to attract overseas investment in UK plc. But a case at the High Court last week casts some doubt over that.
It all goes back to a case brought by Richard Desmond, the owner of the Express newspapers (and retired pornographer), who sued the Gambling Commission over their decision in 2022 to award the National Lottery licence to Allwyn. Allwyn is a company owned by Karel Komarek, a Czech businessman with interests around the world. They’re the biggest lottery operator in Europe and have the licence to operate in the US states of Illinois and Michigan.
Desmond’s case was that he should have been awarded the licence, not Allwyn. He lost and now faces legal bills of £70 million. But the judgment on his claim makes wretched reading for the Gambling Commission.
The Gambling Commission does not come under the purview of the Treasury
The judge found that, in essence, the commission botched the handover of the lottery licence. Camelot had run the lottery for nearly 30 years before Allwyn was awarded the contract. And it did not go quietly into the night, fighting tooth and nail against Allwyn via legal challenges and what the court heard was a ‘concerted strategy of obstruction’.
The effect of all this, the judge found last week, was that the national lottery was ‘undermined’. Allwyn was unable to fully implement its strategy to increase lottery revenues and pay more money to good causes. Britain, in other words, lost out. Mrs Justice Joanna Smith ruled:
I find that these factors fundamentally undermined Allwyn’s ability effectively to progress transition, leading to very substantial delay, increased costs and loss of revenue for good causes and for Allwyn.
The judge also found that the Commission ‘could and should have’ seen this coming and realised Camelot would play silly buggers. ‘A reasonably diligent public authority’ would have ‘foreseen’ this ‘from the outset’, she wrote.
The other consequence is that Allwyn has ended up with unforeseen additional costs in excess of £250 million. They paid £100 million in 2023 to buy out Camelot to ensure continuity of supply and invested another £170 million in new lottery equipment for shops, which had not been overhauled for years.
This is where it all has wider implications. Allwyn is known to be looking for a permanent corporate home for its global interests. It is considering where to list its shares. One option is the New York Stock Exchange. After all, Allwyn has significant interests in the US and owns the growing prediction market sector, which is booming as part of Donald Trump’s embrace of new technology and new markets.
Or could Allwyn be persuaded to list on to the London Stock Exchange? Goodness knows the City of London could do with such a major listing. Allwyn is worth somewhere between £15 and £20 billion and therefore would likely join the FTSE 100. That would be a serious boost to a struggling market.
But how helpful is the Gambling Commission being? That court ruling suggests the answer is somewhere between ‘not much’ and the ‘square root of sweet FA’.
This is at odds with the strategy that ministers are increasingly keen for regulators to take. The Treasury is forever leaning on its regulators, the Competition and Markets Authority, the Financial Conduct Authority, and also on sector regulators such as Ofgem and Ofcom, to support those who might channel much-needed billions into the UK economy.
In parts of Downing Street and the Treasury there are people who are falling over themselves to woo Allwyn and Komarek himself, who is personally worth £10 billion. They are ‘exasperated’ by the Gambling Commission.
But the Commission does not come under the purview of the Treasury; it is the responsibility of the Department of Culture, Media and Support, run by Lisa Nandy. Andrew Rhodes, the CEO of the Commission is stepping down at the end of this month. No permanent replacement has yet been lined up. It is another test of the government’s seriousness: whether they get someone in who might get with the programme on growth.
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