National Lottery bosses being ‘micro-managed' after IT upgrade failure
The new operator of the National Lottery is coming under intense scrutiny from regulators as it struggles to carry out a much- delayed technology upgrade.
Allwyn UK, which took over running the lottery in February last year, is being closely monitored by the Gambling Commission amid growing concerns about its handling of the contract and a pledge to increase charitable donations.
The regulator is understood to be demanding that it signs off decisions in all areas of the business, including reviewing and approving contracts.
This increased level of monitoring by the watchdog is understood to be the reason why Allwyn is shutting down National Lottery terminals for 36 hours to carry out a major system update later this summer.
The mounting pressure from regulators follows Allwyn's failure to carry out a crucial IT upgrade and after it watered down key promises on charitable donations.
Allwyn, which is owned by Czech billionaire Karel Komárek, has said it will pump £350m into modernising the National Lottery, including upgrading its estate of 43,500 terminals.
The tech update was supposed to be in place when Allwyn took over the contract from previous incumbent Camelot, but has been plagued by delays.
Allwyn has said the overhaul is critical to its promise to increase returns to good causes.
The company initially said it would increase donations from £17.9bn to £38bn over the course of the 10-year licence – equivalent to about £3.8bn a year.
But it has watered down these targets by pledging to double returns by the end of its licence, from £30m to £60m a week – or less than £3.2bn a year.
The Gambling Commission, which awarded the fourth National Lottery licence to Allwyn in September 2022, is reportedly considering taking action against the company over its failure to deliver on promises made during its bid.
These include the delayed tech upgrade, as well as a vow to reduce ticket prices for the main lottery draw from £2 to £1.
One Allwyn insider took aim at the 'severe level of micro-management' by the regulator, branding it 'completely disproportionate'.
Legal action
They warned that the interference was harming Allwyn's ability to raise money for good causes, as well as its ability to compete with rivals such as Omaze and the People's Postcode Lottery.
The regulator is itself facing legal action from Richard Desmond, the media mogul who launched an unsuccessful bid to secure the fourth licence.
Mr Desmond this week filed a claim in the Competition Appeals Tribunal over £70m set aside for charitable donations under Camelot. He alleges that these funds constitute a 'subsidy' and should be recovered from Allwyn.
The fresh legal challenge comes on top of a £1.3bn claim against the Gambling Commission over its decision to hand the licence to Allwyn. Mr Desmond is arguing that the bidding process for the 10-year contract was unfair.
A spokesman for Allwyn said: 'We of course work very closely with the regulator. It is right, proper and required by the regulations that they play an active oversight role, especially as we work towards the biggest technical transformation the National Lottery has seen in 30 years.'
A Gambling Commission spokesman said: 'The commission continues, as it has done since the start of implementation, to oversee and assess Allwyn's contractual obligations to deliver the technology upgrade of the National Lottery which Allwyn committed to in its successful application.
'At the same time the commission is fulfilling its statutory duties, as the regulator of the National Lottery, to regulate Allwyn's operation of the National Lottery in accordance with the fourth National Lottery licence.'
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