Gambling Commission facing subsidy control appeal 

Companies behind the Health Lottery have launched an appeal under the Subsidy Control Act 2022 against the Gambling Commission’s decision in July 2023 to award more than £70m to Camelot for marketing and promoting the National Lottery.

The appeal, published by the Competition Appeal Tribunal (CAT) under section 70 of the Act, names Northern & Shell, the New Lottery Company (established by Northern & Shell to compete for the fourth National Lottery licence), and Health Lottery ELM, which provides external lottery management services and is wholly owned by Northern & Shell.

Camelot operated the National Lottery until 1 February 2024, but following the awarding of the fourth licence to Allwyn Entertainment in September 2022, the operation transferred on 1 February 2024. In February 2023, Camelot was acquired by the Allwyn group, resulting in the two entities coming under common control. According to the notice of appeal, this merger means Camelot and Allwyn now together constitute a single “enterprise” under section 7(1)(b) of the Act.

Local Government Lawyer reported that the appeal notes that the National Lottery functions within a competitive sector. It faces competition not only from what Camelot describes as “synthetic lotteries” – including unregulated “shadow lotteries” operating from outside the UK and involving bets on the outcomes of regulated lotteries – but also from “society lotteries” licensed under the Gambling Act 2005. Among these competitors is the Health Lottery, operated by Northern & Shell. Furthermore, the notice clarifies that the National Lottery is part of the broader gambling market.

The disputed subsidy stems from a grant of approximately £70m from the National Lottery Distribution Fund (NLDF), which is managed by the Secretary of State pursuant to section 21 of the National Lottery etc. Act 1993. The NLDF collects revenues not paid out as prizes and reallocates these funds to “good causes” in accordance with section 22 of the Act. The appellants argue that the NLDF funds provided Camelot – and, by extension, Allwyn – with an economic advantage by boosting its marketing capabilities and strengthening the National Lottery’s competitive position.

According to the notice of appeal, the Gambling Commission erred in law in two principal ways. First, the appellants contend that the Commission failed to recognise that the money from the NLDF constituted a “subsidy” as defined by the Act, and hence did not apply the subsidy control principles. Alternatively, the appellants submit that even if it were categorised as a subsidy, it would not have met the necessary conditions set out in Schedule 1 of the Act. They further argue that the Gambling Commission lacked the statutory authority to make such a payment.

Seeking comprehensive relief, the appellants are asking the tribunal for declarations, a quashing order of the decision, a recovery order for the funds, and an award of costs.

A spokesperson for the Gambling Commission stated that it would not comment on the ongoing legal proceedings.