From Russia With Love: UK Lottery Operator Allwyn Borrowed Millions From Kremlin Banks

So all those rumours about the UK National Lottery’s then-wannabe operator, Allwyn, having a Russia financial connection were right all along, it’s been revealed.

According to an investigation by The Guardian newspaper, Allwyn–owned by Czech billionaire Karel Komárek’s Sazka Group–borrowed some €640 million (£545.04m/US$699.97m) from a consortium of lenders that included two Kremlin-owned banks, VTB and Sherbank, to help underwrite their European gaming and lottery expansion.

Crucially–and critically–from a legal perspective, Allwyn repaid the Russian tranche of the loan before it was named as “the preferred bidder” for the new £6.5 billion (US$8.35bn/€7.63bn) UK Lottery licence; ahead of its bitter bidding rival and long-standing lottery operator, Camelot.

Against the background of growing anti-Russian political sentiment and economic sanctions triggered by president Putin’s human rights abuses and subsequent full invasion of Ukraine, Allwyn vehemently denied direct links to the Russian regime during the highly-charged campaign to win the UK Lottery licence — the richest prize in British gambling.

Komárek, who made, and makes, much of his fortune from the energy business, admitted his Sazka Group had once had ties to Russia’s state Gazprom company, through a gas storage facility in his native Czech Republic.

But these ties with Gazprom were severed before the pan-European gambling and lottery group was formally awarded the UK Lotto licence on September 20 last year, which came into operational effect on February 1 this year.

Cash Cow

Camelot, which had run the UK Lottery since its launch in 1994, and other principal contenders for the new 10-year licence, among them Italy’s Sisal Group and media baron Richard Desmond’s Northern & Shell, bitterly opposed Allwyn’s bid for the licence.

With around 30 percent of the addressable UK population playing the national lottery at least once a month, the lotto is the recognised cash cow of British betting.

In the 12-months ending in March 2023, for example, lottery ticket sales totalled £8.19 billion (US$10.52bn/€9.61bn).

From this, £4.69 billion (US$6.02bn/€5.5bn) was awarded to winners; £1.87 billion (US$2.4bn/€2.19bn) was donated to charity and cultural projects; £982.8 million (US$1.262bn/€1.153bn) went to the government in tax and £254.7 million (US$327.18m/€299.05m) was earned by retailers in commission.

Sitting astride such wealth, Camelot, somewhat incongruously owned by the Canadian Toronto Teachers’ Pension Fund, threatened legal High Court action to overturn the regulatory Gambling Commission’s decision to award the new, and fourth, licence to Allwyn.

But Allwyn emasculated the legal threat by the simple expedient of buying Camelot, and its wider North American operations, outright.

Sanctions

Commenting on the historic Russian bank loans, Conservative MP Iain Duncan Smith, a former Tory party leader and now Vice-chair of the All Party Parliamentary Group on Gambling-related Harm said:

“There may well have been nothing concerning about this lending. But if so, why were MPs and the public not told about it?

“A public sector contract of this value and importance should be subject to the utmost transparency requirements.

“The Gambling Commission must come forward with an urgent explanation.”

iGamingFuture is keen to stress that in no way do we believe–or are suggesting–that Allwyn, and its ultimate owner Karel Komárek, have acted in breach of British and other international sanctions against Russia, president Putin and his acolytes and enablers.

Responding to The Guardian, Allwyn affirmed: “By 25 March 2022, only one month after the invasion of Ukraine, [we] had repaid all amounts owed to VTB and Sberbank.

“Allwyn has repeatedly expressed its horror at Russia’s invasion.”

The Gambling Commission said: “[We] required all applicants to declare any and all sources of funding that were to be used for both their application or for the running of the national lottery.

“We were–and still are–satisfied that no sanctioned entities are involved in funding Allwyn.”