UK National Lottery's future operator Allwyn reportedly in talks to buy out Camelot's UK operations for $115M

The next operator of the UK National Lottery, Allwyn, which will succeed current operator Camelot in 2024, is currently in talks to buy the firm in a GBP 100 million deal ($115 million) that would allow for the removal of the latter’s final legal challenge against the country's industry regulator.

As reported by Sky News, Allwyn is in advanced discussions with Camelot’s Canadian owner about a takeover of its UK operations. An agreement is said to be struck in the coming weeks. The Gambling Commission, which oversaw the awarding of the new license earlier this year, has allegedly been informed about these discussions. 

Should the deal be completed, Allwyn will gain access to Camelot’s UK earnings roughly a year before it surrenders control of the franchise it has held since the National Lottery launched in 1994. It would also trigger the withdrawal of Camelot’s legal challenge against the UKGC over the decision to choose Allwyn as the preferred applicant for the National Lottery.

In September, the incumbent operator withdrew its appeal against the license award but said it would still proceed with a separate claim for compensation. That would also be withdrawn if Allwyn buys Camelot’s UK arm, according to the aforementioned source.  

Camelot had suggested the regulator’s assessors flagged “implausible” revenue forecasts at Allwyn, owned by Czech billionaire Karel Komarek, and accused the regulator on the grounds of breaking the law when it allegedly discarded Camelot’s score in the system that measures the bids. The current operator claims it would have been appointed had the commission not made a “manifest error."

This was contested by the UK's regulator. "We have taken every step possible to ensure a level playing field for all interested parties, to enable us to appoint a licensee who will engage and protect players, run the National Lottery with integrity and ensure the National Lottery maximizes support for good causes and its contribution to society through further innovation and investment," the UKGC defended its decision earlier this year.

The UK Gambling Commission's pick of Allwyn as its preferred applicant for the fourth license to operate the Lottery was contested in a legal challenge shortly after it was announced earlier this year. In June, the court ruled to lift the automatic suspension preventing the UKGC from entering into agreements with Allwyn to commence the transition process.

UK’s National Lottery is one of the world’s largest lotteries. When it takes over, Allwyn is expected to halve the cost of the tickets for the main draw to their original GBP 1 price. Back in June, Camelot said sales last year had exceeded GBP 8 billion, but acknowledged that they had fallen for the first time in five years. 

Justin King, the former J Sainsbury chief executive and now Allwyn chairman, said last month that under Allwyn’s stewardship “sales growth is expected to result in the money allocated to UK good causes more than doubling.” He also said that the National Lottery of the future will “build on a cutting-edge technology platform that will improve player protection over the next 10 years and beyond.”

Camelot currently employs roughly 1,000 people, most of whom are expected to work for Allwyn once the license handover takes place. It was unclear whether the UKGC would insist on separate governance arrangements for Camelot’s UK business after the purchase by Allwyn is completed.