Richard Desmond to Pay Gambling Commission’s Fees After Lottery Loss

A High Court judge has ordered a company owned by British businessman Richard Desmond to pay the legal costs of regulator the Gambling Commission, following a failed £1.3 billion damages claim regarding the awarding of the National Lottery license to Allwyn Entertainment.

In April, Mrs Justice Joanna Smith ruled Desmond’s Northern & Shell and The New Lottery Company (TNLC) had failed to make a case of manifest error on the part of the Commission when the fourth National Lottery license was awarded to Allwyn in 2022. Following that ruling, Desmond mentioned his plan to appeal against the verdict.

Allwyn took over from Camelot, which had operated the National Lottery since its inception in 1994. Desmond had attempted to gain the license himself, and claimed he had incurred £17.5 million in needless costs while making his unsuccessful bid.

Costs could top £40 million

Northern & Shell and TNLC will now have to pay the Commission’s legal costs for that court case, which could total more than £40 million. Smith has ruled 75% of these legal costs will have to be paid immediately. Desmond’s company had issued a two-pronged court challenge to the awarding of the license.

The first of these focused on the process the Commission used to score Desmond’s bid when ultimately rejecting the application. The second of these was regarding the lawfulness of alleged modifications made by the Commission to the contract for the fourth license. However, Smith ruled the Commission was right to determine Desmond’s bid failed more than half the 23 mandatory requirements for a bid to be considered eligible.

An “enormous gap”

According to Smith, there was an “enormous gap” of more than 30 in the scores between Northern & Shell’s aggregate score and that of Allwyn. Desmond’s company was judged to have incurred no loss and Smith wrote it had been “fanciful to suppose” it “would have won” against Allwyn.

The costs ruling against Northern & Shell is potentially open to appeal, but lawyers for the Commission noted the interim order was a “significant milestone” that marked an end to that element of the claim. The Commission’s legal costs are reported as being around £22 million, but Desmond’s company will also have to pay Allwyn’s legal bill and its own lawyers.

As the ruling was made on an indemnity basis, where the opposing litigant is deemed to have made a claim unreasonably, the total bill is expected to rise beyond £40 million. Smith’s written ruling is expected to be published in the coming weeks. In her previous ruling, Smith wrote: “The extent of this movable feast was regrettable and (given the legal resources available to the claimants) inexcusable.

“It led to significant time being wasted by the other parties in dealing with issues which were subsequently abandoned. It also risked leaving the court with an imperfect understanding of how the case was being advanced. To describe this as surprising, given the nature and alleged value of this claim, would be an understatement.”

Previous TNLC ruling

This was not the first ruling to have been made against the TNLC. The Competition Appeal Tribunal (CAT) dismissed a separate challenge in February, where the TNLC had alleged the Commission’s arrangements around the awarding of the license amounted to an unlawful subsidy.

In January, Allwyn has announced what it called a major upgrade to the National Lottery’s digital platforms, with the update allowing Allwyn to offer the largest ever range of National Lottery games.

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