UK Lottery Operator Allwyn Won’t Hit Short-Term Donation Targets

Posted on: February 5, 2024, 03:56h. 

Last updated on: February 6, 2024, 12:20h.

Philip Conneller @casinoorgphilc Read More

Expertise: Gaming Business, Regulation, Tribal Gaming.

Allwyn Entertainment officially took over the reins as the UK’s new lottery operator last week. Yet it has already admitted that it won’t hit its promised short-term targets on donations to good causes.

That’s controversial because Allwyn won the estimated $80 billion (US$100 billion) tender, one of the UK’s biggest public sector contracts, based on those projections. It faced several legal challenges from losing bidders.

The Czech company, formerly known as Sazka, pledged to raise £38 billion (US$48 billion) for good causes over the next 10 years, donating $3.8 billion each year. Previous operator Camelot, which has since been acquired by Allwyn, was in control of the lottery since its inception 29 years ago, and gave £48 billion (US$60 billion) to good causes during that period.

Change of Plans

Allwyn says it remains committed to hitting its targets by the end of the 10-year license period in 2034 but added the “change to our plans is to the timing.”

It blamed delays in the handover process caused by legal action challenging the UK Gambling Commission’s (UKGC) decision to award the contract to Allwyn. Camelot filed lawsuits before Allwyn acquired the lottery, as well as Camelot’s former technology partner, IGT, and another losing bidder, the British billionaire Richard Desmond.

Allwyn bought Camelot last year to grease the skids on the complex transition process, which was delayed by six months because of legal action.

Since then, there has been tension between long-standing Camelot management and their new bosses, The Financial Times has reported.

Allwyn is expected to run the lottery at a loss for several years, according to FT sources.

‘False Prospectus’

In a debate in the House of Lords last Thursday, Labour Viscount Chandos Thomas Lyttelton asked whether the franchise award to Allwyn by the Gambling Commission may have been “based on a false prospectus.”

Today is the first day of the new lottery franchise, yet the new franchisee has already talked about struggling to match previous years’ distribution [to good causes] and a delay in any increase,” Lytteton noted. “If, as is now predicted, lottery funding for the arts and other good causes does not meet the original projections on which the franchise was awarded, will the government make up the difference through an increase in the grant-in-aid?”

Lyttelton suggested that the policy that keeps lottery and government funding separate should be relaxed during the first few years of Allwyn’s tenure to compensate charities for the shortfall.

Dialing Back New Games

Allwyn hoped to increase lottery revenues by adding new games and draws to attract younger users. But in the first year of operations, lottery sales from prize draws and scratch cards are expected to drop, forcing it to dial back on its pledge to introduce new games for the time being.

The operator also said that its plan to reduce the ticket cost from £2 to £1 was also under review.