Richard Desmond loses court case over £70m lottery handout

Richard Desmond’s legal battle against the National Lottery has been dealt a setback after a judge dismissed his attempt to recoup a £70m handout.The media mogul had alleged that funds set aside for charitable donations that were retained by the previous operator represented a “subsidy” and should therefore be recovered from Allwyn, the company controlled by Karel Komárek that now holds the licence.Mr Desmond’s Northern and Shell group launched the legal action after he lost out to Allwyn in an effort to secure the fourth National Lottery licence.But in its judgment on Thursday, the Competition Appeal Tribunal dismissed the claim, ruling that the £70m payout was “consistent with normal market conditions” and therefore did not constitute a subsidy.The judge also ruled that Northern and Shell had delayed unduly by waiting four months after becoming aware of the payment to issue proceedings.Long-running legal battleThe verdict marks a blow for Mr Desmond in a bitter legal dispute with the Gambling Commission over the National Lottery.The 74-year-old has mounted a separate £1.3bn claim against the regulator over its failure to award him the latest 10-year licence, arguing that the bidding process was unfair. A judgment in that case is expected in April.The smaller claim related to the Gambling Commission’s decision to allow previous operator Camelot to take just over £70m from a pool set aside for charitable donations and reinvest it in marketing the lottery.Northern and Shell argued that this “conferred an economic advantage” on both Camelot and Allwyn, which acquired Camelot after gaining control of the lottery in early 2024.The sum was withdrawn from the National Lottery Distribution Fund, a pot that collects revenues from the lottery not paid out as prizes and hands them out to good causes.A source close to Mr Desmond’s company argued that the £70m could have been used to support British Olympic athletes or other major UK charities.In its defence, the Gambling Commission argued that the money was retained with the purpose of marketing the National Lottery to increase returns and therefore pay out more to good causes.The regulator said the investment did not amount to a subsidy, that Camelot and Allwyn were not economically advantaged and that a rational commercial operator would have approved the investment.Declining lottery salesMr Desmond’s legal battle comes against the backdrop of fierce scrutiny of Allwyn’s handling of the National Lottery licence.The company’s long-promised IT upgrade has been beset by delays and outages and is now on track to go £250m over budget.Meanwhile, declining lottery sales have put Allwyn’s ambitious pledge to double charitable donations over the course of the licence in doubt.Recent figures showed the lottery’s charitable donations fell to a two-year low in the final three months of last year as sales of scratch cards and EuroMillions games fell.Samantha Ward, a partner at Clifford Chance, which is advising Camelot and Allwyn, said: “We are delighted with the Tribunal’s judgment in what is only the third subsidy control challenge brought under the Subsidy Control Act 2022.“The Tribunal has confirmed that no subsidy was provided by the Gambling Commission to our clients Camelot or Allwyn.”A spokesman for Northern and Shell said the company was disappointed with the judgment and was considering its options.They added: “N&S stood to gain nothing from its application. Any remedy from the CAT would have required the repayment of funds to good causes, not to N&S. “However, N&S sought to highlight what it felt was the unfairness of Camelot effectively being given £70m from good causes at a time when it made over £90m in profit from the National Lottery.“N&S stands by its decision to bring the application and welcomed the opportunity for the matter to be raised at the Tribunal.”The Gambling Commission was contacted for comment.