The media billionaire Richard Desmond will begin a bitter courtroom battle with the Gambling Commission this week that could cost taxpayers hundreds of millions of pounds in a row over the licence to run the National Lottery.
Northern & Shell and The New Lottery Company (TNLC), owned by Desmond, are suing the gambling regulator for up to £1.3bn, alleging “manifest errors” in the labyrinthine competition process for Britain’s largest public sector contract, the lottery licence.
Allwyn, a new vehicle ultimately owned by the Czech billionaire Karel Komárek, won the 10-year licence in 2022 and has run the draw since 2024, the first time in the lottery’s 30-year history that it had been run by a company other than Camelot.
Dubai-based Desmond – the former proprietor of titles including the Daily Express, Asian Babes and Readers’ Wives – has since launched a series of legal challenges linked to the decision.
Sources close to Desmond said he felt he was needlessly strung along, wasting millions on a bid process that was pre-determined.
Lawyers for his companies will make two main claims. The first is that the bid competition itself was flawed, for multiple reasons.
They will argue the Gambling Commission wrongly deemed TNLC’s bid to have failed to fulfil crucial criteria, that the commission imposed undisclosed criteria and the regulator failed to provide feedback after the first phase of the competition, which might have allowed the company to improve its bid.
Lawyers for the Brexit-backing billionaire, who has invoked EU law to pursue his claim, will point to alleged conflicts of interest that might have affected the regulator’s impartiality.
They will also say Allwyn should have been disqualified because it breached strict rules against briefing the media and alleged that the commission failed to consider links, revealed by the Guardian, between Allwyn’s Czech owner and Russian banks.
Desmond’s lawyers claim his companies wasted £17.5m on the bid process as a result.
The second strand of his claim is the commission adjusted the terms of the contract after it had been awarded, meaning the competition should have been rerun, giving Desmond another chance of winning.
It is this part of the claim that seeks damages of up to £1.3bn for earnings that Desmond’s companies could have made.
In practice, any payout is likely to be smaller as the judge can adjust it based on an assessment of how likely Desmond would have been to win.
But a victory for the media mogul could have a significant cost for charities and the taxpayeras any payout would have to come from a lottery pot of money set aside to fund good causes.
If the payout is larger than the fund, which is understood to receive about £30m a week from lottery ticket sales, the taxpayer would have to foot the bill.
Earlier this year, Desmond rejected a settlement offer from the commission, understood to have been worth about £10m.
The Gambling Commission will defend its process as robust. It has argued in legal submissions that Desmond’s bid was “fanciful” and scored “extremely badly” in a rigorous competition process.
Allwyn is also a party to the case, in effect on the commission’s side, on the basis that its reputation would suffer if Desmond’s lawyers succeed in convincing a judge that it should not have won the bidding process.
Both sides have won various minor victories in the phoney war prior to the case beginning.
Desmond dropped the part of his case relating to how the bidding process was scored, leading to an order by the judge to pay some of Allwyn’s and the commission’s costs in disclosing documents. This is thought to have cost the billionaire several million pounds.
But the Gambling Commission also tasted defeat after a blunder by its lawyers, who accidentally disclosed thousands of documents, most of which a judge ruled could be used by Desmond.
The billionaire also obtained internal emails that he claims shows the regulator was “revelling” in negative coverage of him, allegedly providing evidence of bias, according to the Financial Times.
The Gambling Commission, Allwyn and a representative of Richard Desmond all declined to commentbefore the case, which begins on Thursday at the high court.
