Camelot to Launch Legal Action in Fight for $105B UK Lottery Contract

Posted on: March 28, 2022, 12:31h. 

Last updated on: March 28, 2022, 01:19h.

Philip Conneller @casinoorgphilc Read More
Expertise: Gaming Business, Regulation, Tribal Gaming.

UK National Lottery operator Camelot plans to mount a legal challenge to the loss of its contract in the coming days, The Daily Telegraph claims.

UK National Lottery
Czech billionaire Karel Komarek, seen above, whose Allwyn Entertainment has won the UK National Lottery contract. But questions have been asked in British parliament about his business ties to Russia. (Image: Novinky.cz)

Camelot, which has run the lottery since its inception in 1994, failed in its rebid for the contract. That’s a deal that could be worth ￡80 billion (US$105 billion) over the next decade, according to analysts.

On March 15, the UK Gambling Commission announced the successful bidder as Allwyn Entertainment, a UK subsidiary of Czech group Sazka, Europe’s largest lottery operator. Sazka is owned by Czech oil and gas tycoon Karel Komarek.

To make matters worse for Camelot, just days later, the UKGC handed the operator a ￡3.15 million (US$4.17 million) fine. Camelot was found to have told as many as 20,000 winners they were losers over a four-year period because of a system glitch. ?

But with so much at stake, legal action was always possible, if not probable. Now, Camelot is expected to demand a judicial review of the process, as well as a procurement challenge in the UK’s High Court, the Telegraph reports.

Scores ‘Adjusted’

Camelot is expected to allege that the regulator adjusted the bidders’ scores after Camelot initially came out on top. A “risk factor” discount of up to 15% was supposed to applied to the financial projections made by each bidder.

This discount was initially factored into the Allwyn bid, which would have made Camelot the winner. But it was scrapped in the final adjudication, the Telegraph claims. Crucially, Allwyn claimed it would raise ￡38 billion (US$50 billion) for good causes, a far greater amount than Camelot’s projections.

Camelot’s alleged early lead in the race may have led to premature media reports that the incumbent operator had retained its license. The UKGC later denied these reports to Casino.org, just weeks before handing the license to Allwyn.

Russian Ties

Meanwhile, questions have been asked in parliament about Komarek’s business ties to Russia. Labour shadow minister for Tech, Gambling, and the Digital Economy Alex Davies-Jones this week asked for clarity over the future lottery operator’s relationship with Russia’s state-owned energy giant, Gazprom.

In 2016, Kormarek’s company, MND, built an underground gas storage facility in the Czech Republic in partnership with the Russian group. Komarek said in a statement last month that he took the decision “many years ago” to divest himself of his Russian assets, with the exception of “a gas terminal and the 50/50 joint venture with Gazprom in the Czech Republic.”

He has publicly condemned the Russian invasion of Ukraine.

Meanwhile, the UKGC said it is “satisfied that no application is impacted by sanctions related to the conflict in Ukraine.”