Allwyn named Preferred Applicant for fourth National Lottery licence

The Gambling Commission has today (15 March 2022) named Allwyn Entertainment Ltd (“Allwyn”) as Preferred Applicant for the fourth National Lottery licence.

The National Lottery is one of the world’s largest lotteries and the current – third – licence is due to expire in 2024. Since launching in 1994, National Lottery players have collectively raised more than £45 billion for 660,000 good causes across the UK, transforming lives and contributing to the arts, sport, heritage and communities.

The selection of Allwyn as Preferred Applicant follows a fair, open and robust competition which received four applications at the final stage. This is the highest number of applications since the first National Lottery licence was awarded in 1994.

Allwyn has committed to investment in the National Lottery that is expected to deliver growth and innovation across the National Lottery’s products and channels, resulting in increased contributions to good causes, subject to the protection of participants and propriety.

The Gambling Commission is content that all applicants are fit and proper to operate the National Lottery. Recognising our role as a responsible regulator we are also satisfied that no application is impacted by sanctions related to the conflict in Ukraine.

Alongside Allwyn, the other applicants were Sisal Spa, Camelot UK Lotteries Ltd, and The New Lottery Company Ltd. Camelot UK Lotteries Ltd has been named Reserve Applicant.

This milestone marks the first day of a legal standstill period, lasting at least 10 days, that will be followed by a 22-month transition towards the fourth licence.

Andrew Rhodes, Gambling Commission Chief Executive Officer, said:

“In its lifetime, the National Lottery has raised more than £45 billion for good causes and is rightly seen as a great national asset. Our priority was to run a competition that would attract a strong field of candidates. Having received the most applications since 1994, it is clear that we’ve achieved just that. I am confident that the success of the competition will lead to a highly successful fourth licence – one that maximises returns to good causes, promotes innovation, delivers against our statutory duties, and which ultimately protects the unique status of the National Lottery. We look forward to working with all parties to ensure a smooth handover.”

John Tanner, Gambling Commission Executive Director and Senior Responsible Owner for the competition, said:

“The Commission is grateful to all four applicants for their engagement in the competition. We were impressed by the overall standard of applications, including the range and quality of innovation proposed, and the high level of confidence and ambition demonstrated for the prospects of the National Lottery under the fourth licence.”

Note to editors

1. Legal standstill period

• following this announcement there is a legal standstill period, lasting at least 10 days. This period allows all applicants to consider the outcome of the competition and feedback on their application, prior to the Commission entering into legal arrangements with the Preferred Applicant
• the standstill period is followed by the ‘award notification.’ This is when the Preferred Applicant is confirmed as the ‘Incoming Licensee’ and the implementation period begins
• during the legal standstill period – in order to protect the integrity of the process – neither the Commission, nor applicants to the competition, are able to provide commentary on the details of any application
• once the legal arrangements are entered into, at the end of the standstill, the Preferred Applicant will begin preparations for transition to the fourth licence. During this period, there will be no change to the operations of the National Lottery.

Preferred Applicant and Reserve Applicant status

• the Preferred Applicant, Allwyn Entertainment Ltd, is the organisation with whom the Commission intends to finalise the licence
• in addition, Camelot UK Lotteries Ltd has been selected as Reserve Applicant. The Reserve Applicant is the applicant with whom the Commission would intend to finalise the licence, in the event that finalisation could not be achieved with the Preferred Applicant
• the Gambling Commission was solely responsible for the decision to award a National Lottery licence. The decision is made independently by the Gambling Commission’s Board of Commissioners
• the Gambling Commission is content that all applicants are fit and proper to operate the National Lottery
• the government’s sanction regime is a rapidly developing situation. As a responsible regulator, we have conducted due diligence to ensure applicants are not impacted by sanctions. The Commission is satisfied that no applicants are currently impacted.

3. The fourth National Lottery licence

The world has changed significantly since the third National Lottery licence was awarded in 2009. To ensure the National Lottery remains relevant to all of society, and continues to bring significant returns to good causes, the Gambling Commission has developed a new form of licence. The licence is designed to support innovation and maximise returns to good causes, while protecting the unique status of the National Lottery.

Key changes for the fourth licence include:

• a new incentive mechanism that ensures the licensee’s incentives and delivery are better aligned with contributions to good causes. Under this mechanism the licensee’s profits will be more closely aligned to the returns to good causes than ever before
• a move to an outcomes-based approach, in line with best practice and the National Audit Office’s recommendations. This will give the licensee greater responsibility to fulfil its obligations, while retaining the Commission’s power to intervene if they do not  
• greater flexibility for the licensee, allowing them to more rapidly, and effectively, adapt their offerings to reflect changing technology, regulation and consumer preferences, so long as they meet the licence obligations
• a fixed 10-year licence, providing the licensee with a clear period for investment planning
• a retail charter to ensure the next licensee engages proactively with retailers when the fourth licence commences in February 2024.

4. History of the National Lottery

There have been three competitions for the National Lottery since its inception in 1994. The current licensee applied for, and won, on all three occasions.

• the first licence: 1994 – 2002
• the second licence: 2002 – 2009
• the third licence: 2009 – 2019 (Note: The National Lottery Commission extended the third licence in 2012, taking it to 2023. This was followed by two further 6-month extensions owing to the global pandemic. The current licence now ends February 2024)

The Office of National Lottery (OFLOT) ran the first licence competition and the National Lottery Commission ran the second and third. The merger of the Gambling Commission and the National Lottery Commission occurred in 2013.

5. About the Gambling Commission

The Gambling Commission is the UK’s independent, statutory body responsible for awarding the licence to run the National Lottery and tasked with regulating it to ensure safe and fair play. The current licence is due to expire in 2024.

As part of our responsibility as a regulator, we have three overriding statutory duties:

• to ensure the National Lottery, and every lottery that forms part of it is run and promoted with all due propriety
• to ensure the interests of every participant in a Lottery are protected
• subject to the above two duties, to do our best in making sure that the net proceeds of the National Lottery are as great as possible.

Whilst the Gambling Commission is responsible for managing the competition and regulating the National Lottery, the distribution of funds it generates is separate. This is carried out by independent distribution bodies, overseen by the Department for Digital, Culture, Media & Sport and the devolved administrations.

6. About the National Lottery

Since launching in 1994, National Lottery players have collectively raised more than £45 billion for 660,000 good causes across the UK, transforming lives and contributing to the arts, sport, heritage and communities.

There have been more than 6,300 new millionaires created and National Lottery players raise more than £30 million every week for good causes.

For more information, please visit  www.lotterygoodcauses.org.uk (opens in a new tab)

7. Competition timetable

• competition launched – August 2020
• Invitation to Apply issued – October 2020
• final application deadline – October 2021
• outcome notification – March 2022
• award notification – March 2022
• start of fourth licence – February 2024

You can download today’s Gambling Commission announcement below.

UPDATES:

1.  Responding to today’s announcement,

Allwyn has stated:

We welcome today’s statement by the Gambling Commission that we have been selected as the Preferred Applicant for the Fourth National Lottery Licence. Our proposal was judged to be the best way of growing returns to good causes by revitalising The National Lottery in a safe and sustainable way. The appointment of Allwyn will breathe fresh life into The National Lottery. In Allwyn, the Gambling Commission has selected a strong team with an impressive track record of improving lotteries. We will immediately work to deliver our comprehensive transition plan and look forward to transforming The National Lottery, making it better for everyone.

Camelot CEO Nigel Railton has said:

I’m incredibly disappointed by today’s announcement, but we still have a critical job to do – as our current licence runs until February 2024. We’re now carefully reviewing the Gambling Commission’s evaluation before deciding on our next steps. I’m enormously grateful to our 1,000-plus employees who have been unwavering in delivering record-breaking results during the current licence. And I know they remain absolutely determined to build on our four and a half years of successive sales growth – which has seen us achieve record sales in each of the last two years, resulting in the best-ever returns to Good Causes from ticket sales last year.

2. On 1 April 2022, as reported by us here, it was confirmed that Camelot UK Lotteries Limited has commenced legal proceedings against the Gambling Commission, challenging the Fourth National Lottery Licence competition process.

3. On 9 April 2022, MailOnline published an article entitled ‘Gambling Commission grabs £155million from National Lottery ticket sales meant for charities’, reporting that “in a letter to Dame Meg Hillier, who chairs the Commons Public Accounts Committee, [Andrew Rhodes, CEO of the Gambling Commission] reveals the costs to license and regulate the lottery spiralled to £154.8 million – more than £50 million above the initial budget of £102.9 million” adding: “He said that the vast sum was being drawn down from the charity funds raised by National Lottery players, but insisted it accounted for just 0.7 per cent of the more than £14.5 billion saved for good causes”. The article:

• quotes the Gambling Commission as responding: “We have made every effort to keep costs low while ensuring that we fulfil our statutory duties and deliver the best possible outcome for the National Lottery” and
• says that the Commission “added that £154.8 million ‘represents a reasonable investment’ against the £80 billion the ten-year contract was expected to generate in ticket sales”.

4. For updates on the legal proceedings mentioned at update 2 above, see our following website postings:

• 30 June 2022: High Court lifts suspension on the Gambling Commission’s ability to formally award the 4th National Lottery licence to Allwyn
• 15 July 2022: Court of Appeal to reassess whether UKGC can formally award 4th National Lottery licence to Allwyn
• 6 September 2022: Camelot withdraws appeal against grant of fourth National Lottery licence