Delays to the rollout of upgraded National Lottery equipment into stores were caused by legal challenges against the Gambling Commission during the Fourth National Lottery Licencing process, Allwyn has admitted.

In the firm’s global 2024 Annual Report released at the end of April, the National Lottery operator said: “In the UK, Allwyn began operation of The Fourth National Lottery Licence on 1 February 2024. In connection with the transition from the Third National Lottery Licence, run by Camelot UK, Allwyn UK entered into an enabling agreement with the Gambling Commission to govern key aspects of the transition.

“This included the planned upgrade of The National Lottery’s existing technology infrastructure, which has long constrained new product development and innovation.

“This comprehensive technology transformation has significant scale and complexity, and is now taking place on a different timetable to that initially envisaged, owing in part to legal challenges against the Gambling Commission in relation to its Fourth National Lottery Licence Competition.”

History of legal challenges around National Lottery

In September 2022 Camelot – which was acquired by Allwyn in 2023 – withdrew its legal challenge against the Gambling Commission’s decision to award the Fourth licence to Allwyn. International Games Technology, who also issued a legal challenge, had its claim withdrawn in 2024. There is still one legal challenge ongoing.

In October 2023, Allwyn admitted to Better Retailing the planned arrival of new terminals into its 40,000 partnered stores had been delayed. Despite this, the firm has been working on overhauling its retail estate with the rollout of new terminals currently underway.

In its latest results, the firm added “enforcement action” could impact the profitability of its UK division, due to not meeting contractual terms with the Gambling Commission.

It said: “The timetable is more demanding operationally, while the delivery of the transition also depends in part on third party suppliers. While Allwyn UK continues to progress as expeditiously as possible while prioritising contributions to Good Causes, after the end of the reporting period a contractual milestone in the enabling agreement was not reached.”

“The Gambling Commission is reviewing what, if any, enforcement action might be taken against Allwyn UK in relation to that milestone. We have incurred and will continue to incur significant costs in the transition process, and not all of these costs may be recoverable by us under the cost recovery mechanism under the terms of the enabling agreement, which could adversely affect the potential profitability of Allwyn UK.”

Commenting after the release of the annual report, an Allwyn spokesperson said: “Allwyn is investing more than £350m into the essential modernisation of The National Lottery, which hasn’t had a significant technology upgrade since 2009. Our investment will help restore the magic to The National Lottery, but the shift from outdated systems is complex and requires robust testing. We will deliver these essential upgrades over the coming year. We are working at pace to complete this transformation as soon as possible, while in parallel continuing to deliver the best possible National Lottery for players and protect returns to Good Causes.” 

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