The Competition Appeal Tribunal (CAT) has dismissed a legal challenge brought by three companies linked to Richard Desmond against the Gambling Commission in relation to a joint marketing investment approved during the Third National Lottery Licence (3NL).
The proceedings were initiated by The New Lottery Company, Northern & Shell PLC and the Health Lottery under section 70 of the Subsidy Control Act 2022.
The applicants sought to overturn the Commission’s decision to authorise a £70.21m ($94.7m) joint marketing investment proposed by Camelot during the final year of 3NL.
The investment permitted revenue generated from ticket sales to be retained and reinvested in marketing activity, with the stated objective of increasing net returns and benefiting National Lottery Good Causes.
The applicants argued that the approval amounted to an unlawful subsidy, conferring an economic advantage on Camelot and, subsequently, Allwyn when it assumed operation of the National Lottery. They contended that the decision failed to satisfy the “commercial market operator” principle under subsidy control rules.
The Tribunal rejected those arguments in full. In its judgment, it stated: “Against that background, the Applicants’ challenge to the Decision based on the adequacy of the econometric modelling is hopeless.”
It further concluded: “In summary, the Applicants’ submissions were little more than speculation. That seems to us to fall considerably short of the hurdle that the case law sets for the application of the CMO principle.”
Samantha Ward, Partner at Clifford Chance advising Camelot and Allwyn, said: “The Tribunal has confirmed that no subsidy was provided by the Gambling Commission to our clients Camelot or Allwyn.”
Ward added: “The judgment provides important guidance on the application of the ‘commercial market operator principle’ under the Subsidy Control Act.”
The ruling represents only the third subsidy control challenge brought under the 2022 Act.
Last week, the Gambling Commission reported Q2 gross gambling yield of £4.3bn, up 7% year-on-year, with National Lottery contributions to Good Causes reaching £402.9m for the period.
Under the Third National Lottery Licence, Camelot remained operator until Allwyn formally took over operations in 2024 following a competitive licensing process
