Gambling Commission seeks settlement with Richard Desmond over £200m lottery license dispute
The UK Gambling Commission is preparing to settle a £200 million legal claim from media mogul Richard Desmond over the licensing of the National Lottery, aiming to resolve a dispute that has hindered technological development.
The UK gambling regulator is reportedly set to settle a £200 million damages claim brought by media mogul Richard Desmond over the operation of the National Lottery. The Gambling Commission has called for an arbitration meeting with Mr Desmond’s company, Northern & Shell, to propose an out-of-court settlement of the legal dispute. This meeting is expected to take place in the coming weeks.
Although the settlement aims to deal with a large claim, it is believed that the final settlement may fall short of the full £200m sought by Mr Desmond.
The decision to pursue a settlement stems from growing concerns that the ongoing legal battle is hampering efforts to improve the technology systems that support the National Lottery, the UK’s largest charity fund.
Mr Desmond launched the High Court challenge after the Gambling Commission awarded a fourth National Lottery license to Czech operator Allwyn, beating out bids from Northern & Shell and incumbent operator Camelot, which has run the lottery since it was founded in 1994.
Allwyn, controlled by gas billionaire Karel Komárek, took control of the lottery in February. However, its operations have faced difficulties, including delays in switching to a new technology provider. The company’s plan to launch a new IT system has been pushed back several times, with further delays expected.
This technological overhaul is central to Allwyn’s strategy to introduce new games and to double the lottery’s contribution to the good news from £17 billion to £34 billion over the 10-year license period.
It is understood that the Gambling Commission’s eagerness to settle is partly due to the expectation that the IT development deadline will need to be extended again. Officials are reportedly reluctant to extend Mr Desmond’s extension pending legal action, fearing it could reinforce his claim that the licensing of Allwyn was a mistake and that the auction system was flawed.
In February, Northern & Shell filed a bribery case against the Gambling Commission over its decision. During a High Court hearing in June, the company described the licensing process as “grossly flawed,” accusing the Commission of giving “unfair treatment to Allwyn.” Mr Desmond once questioned Allwyn’s suitability, saying they had “no experience in the UK.”
Industry experts suggest Allwyn’s new plans should have been in place by the time he took out the licence. Robert Chvátal, Allwyn’s chief executive, had warned of possible delays even before the change. The company missed its summer deadline and is now reportedly targeting February 2025, although insiders believe this could be pushed back, which could impact donations to good causes.
Allwyn says it was caused by some backlash in a legal dispute with former IT provider, International Game Technology (IGT). Although IGT’s legal challenge was dismissed by the High Court in 2023, the company continued to seek damages until January of this year.
An extended delay could hinder Allwyn’s ability to meet his fundraising goals. The company is already falling short of sales forecasts, with profits expected to be significantly lower than the £8.2 billion Camelot earned in its last year.
The National Lottery remains one of the UK’s most profitable public sector contracts and its biggest source of funding for sports, heritage, and charitable causes across the country.
A spokesman for the Gambling Commission said: “In accordance with the court’s order, at all stages the parties must consider resolving the dispute through any alternative dispute resolution method.” Naturally, the Commission will continue to look into those needs.”
Representative Allwyn commented: “We are investing more than £350 million in the biggest technology upgrade in the history of the National Lottery, and are working on the transition from existing systems to our new state-of-the-art site. Once live, we will be able to transform the way customers play the National Lottery and, most importantly, drive the return of positives.”
A spokesman for Mr Desmond declined to comment.
