Allwyn or All Lose, Ukraine-Russia Conflict Stalks UK Lottery

As it ponders its response to losing its 28-year grip on the UK National Lottery, Camelot may have to go back to the teacher’s blackboard, but Allwyn Entertainment, who have been named as the preferred bidder for the new licence, would be best advised to keep the celebratory champagne on ice – and not pop the cork prematurely.

Camelot–owned by Canada’s Ontario Teachers’ Pension Fund–now has a mere 10-days to mount a defense and convince the regulatory UK Gambling Commission (UKGC) of why they should continue to run Britain’s cash-cow lotteries, that have raked-in revenues of almost £7 billion (US$9.14bn/€8.33bn) a year for the past decade.

“I’m incredibly disappointed by today’s announcement,” said Camelot Chief Executive Nigel Railton. “We’re now carefully reviewing the Gambling Commission’s evaluation before deciding on our next steps.”

It’s been a long hard slog to find a licensee for the new 10-year lottery permit, which starts in 2024.

And Allwyn, despite its long and successful experience of running lotteries in Austria, the Czech Republic, Greece, Cyprus and Italy, must be overjoyed at having been declared the provisional winner this week.

Yet with a striking caveat: “For now.”

The invasion of Ukraine has up-ended all certainties and Allwyn– because of its owner’s historic links to Putin’s Russia–will now be under extra scrutiny before it’s given the all-clear – presumably after further due diligence and financial checks.

Allwyn’s parent company, KKCG, is a Prague, Czech Republic-based investment group that runs a natural gas project in Ukraine and still retains a joint venture with Gazprom, Russia’s national oil and gas company, in its native Czech Republic.

An Explosive Cocktail

And as we all know Russia, in its current iteration, and petro-carbons makes an explosive cocktail.

KKCG was founded in 1995 by Czech billionaire Karel Komárek, who, reputedly, has a personal wealth of some US$5.5 billion (£4.2bn/€5.01bn).

It has several subsidiaries, among them: lottery and gaming groups Sazka and Allwyn Entertainment, Aricoma, an information technology group and MND, its energy arm.

Responding to inquiries about the Russia connection, the UKGC asserted: “[We are] content that all applicants are fit and proper to operate the National Lottery.

“Recognising our role as a responsible regulator we are also satisfied that no application is impacted by sanctions related to the conflict in Ukraine.”

Komárek, for his part, claims he has sold off all his interests inside Russia in the last few years.

Along with Camelot, who have run the UK Lottery since its inception in 1994, winning subsequent license bids in 2001 and 2007, the other losing applicants numbered Italian lotto operator Sisal, recently sold to FTSE 100 gambling giant Flutter, and the New Lottery Company.

“In its lifetime, the National Lottery has raised more than £45 billion (US$58.8bn/€53.6bn) for good causes and is rightly seen as a great national asset,” said UKGC Chief Executive Andrew Rhodes.

“Our priority was to run a competition that would attract a strong field of candidates. Having received the most applications since 1994, it is clear that we’ve achieved just that.

“I am confident that the success of the competition will lead to a highly successful fourth licence – one that maximises returns to good causes, promotes innovation, delivers against our statutory duties, and which ultimately protects the unique status of the National Lottery.

“We look forward to working with all parties to ensure a smooth handover.”

Allwyn Entertainment, headquartered in Lucerne, Switzerland and recently valued at US$9.3 billion (£7.11bn/€8.47bn), promised: “[We] will breathe fresh life into The National Lottery.

“In Allwyn, the Gambling Commission has selected a strong team with an impressive track record of improving lotteries. We will immediately work to deliver our comprehensive transition plan and look forward to transforming The National Lottery, making it better for everyone.”

With the Ukraine conflict intensifying and the nexus of Putin’s billionaire enablers fast unravelling, one can only hope, at least for Allwyn’s 6,000 gaming employees, that the company doesn’t have to soon confront a brutal volte-face of All-Lose.