Richard Desmond £70m claim dismissed by Competition Appeal Tribunal

The Competition Appeal Tribunal has dismissed a claim brought by entities associated with media proprietor Richard Desmond alleging that Camelot Group, now part of Allwyn UK, benefited from an unlawful marketing subsidy of £70.21 million approved by the UK Gambling Commission.

The case, formally titled The New Lottery Company Ltd & Ors v Gambling Commission 2026, was brought by corporate entities linked to Mr Desmond including The New Lottery Company Ltd, Northern & Shell and The Health Lottery. The applicants contended that a decision taken by the regulator in 2023 effectively allowed Camelot to retain funds that should otherwise have been transferred to the National Lottery Distribution Fund for allocation to charitable and public causes.

After detailed consideration, the Tribunal rejected the claim in its entirety. The judgment clarifies the interpretation of the Subsidy Control Act 2022 in the context of the National Lottery and provides guidance on the application of the Commercial Market Operator principle in circumstances where a statutory monopoly operates under regulatory oversight.

Background to the dispute

The proceedings arose from a regulatory decision made in August 2023 during the final phase of Camelot’s tenure as operator of the National Lottery under the Third Licence. Under certain licence conditions, Camelot was permitted to seek approval for marketing investment mechanisms intended to stimulate ticket sales and thereby increase long term returns to good causes.

The applicants argued that allowing Camelot to retain £70.21 million that would otherwise have been paid into the National Lottery Distribution Fund amounted to financial assistance from public resources. They contended that this arrangement met the statutory definition of a subsidy under section 2 of the Subsidy Control Act 2022 and should therefore have been subject to stricter scrutiny or prohibition.

The Tribunal recorded that it was common ground between the parties that the burden of establishing that the decision constituted a subsidy rested on the applicants. In its analysis, the panel examined both the statutory framework and the economic evidence underpinning the Commission’s approval.

Allegations of unlawful subsidy

The applicants’ central contention was that the marketing retention arrangement constituted unlawful state support. They submitted that the £70.21 million represented resources foregone by the National Lottery Distribution Fund, thereby diminishing funds available for public benefit and conferring a selective advantage on Camelot.

In addressing this argument, the Tribunal considered whether the regulatory approval satisfied the elements required to establish a subsidy under the Subsidy Control Act 2022. The judges found that the applicants had not demonstrated that the decision amounted to a subsidy within the statutory meaning.

The judgment stated: “It is common ground that the burden of establishing that the Decision constituted a subsidy rests upon the Applicants.” The Tribunal ultimately concluded that the applicants had failed to discharge that burden.

Importantly, the panel examined the commercial and economic rationale presented to the regulator at the time of the decision. Evidence showed that Camelot’s original marketing proposal sought £89.6 million. Following review and independent expert input, the approved amount was reduced to £70.21 million. The Commission undertook econometric analysis and obtained specialist advice before granting approval.

The Tribunal found that this process reflected a structured and commercially informed assessment rather than arbitrary or preferential treatment.

Application of the Commercial Market Operator principle

A significant element of the dispute concerned the applicability of the Commercial Market Operator principle. The applicants argued that because the National Lottery operates as a statutory monopoly there could be no genuine market comparator. On that basis, they contended that the principle should not apply.

The Tribunal rejected this submission. It stated: “The absence of an actual market comparator does not preclude the application of the CMO principle.” The judges further observed: “We therefore reject the Applicants’ contention that the market economy operator principle… should not apply in circumstances where there is no actual market comparator.”

In its reasoning, the panel explained that the relevant question was whether the Commission’s conduct could be assimilated to that of a rational commercial operator acting to maximise returns within a regulated framework. The existence of a monopoly structure did not eliminate the possibility of applying commercial logic to regulatory decisions.

The Tribunal concluded that the Commission’s approach fell within a permissible commercial margin. It emphasised that the regulator’s statutory duties required it to secure the best possible financial outcome for good causes, which may in some circumstances justify temporary retention of funds for reinvestment.

Statutory duty to maximise returns

The judgment placed considerable weight on the statutory duties imposed by the National Lottery etc. Act 1993. Under that legislation, the Commission is required to do its best to ensure that the net proceeds of the National Lottery are as great as possible.

The Tribunal cited this duty directly: “The overriding duties of the Respondent… include the duty to do their best to ensure that the net proceeds of the National Lottery are as great as possible.”

The marketing investment mechanism at issue formed part of Condition 23 of the Third Licence. Its stated purpose was to enable targeted promotional spending designed to drive ticket sales and enhance overall returns. The Tribunal recorded that “considerable effort was put into establishing that funds which were retained by Camelot and invested in marketing… would in turn generate sufficient additional ticket sales to create a net benefit to the NLDF and thereby a net increase in contributions to good causes.”

In effect, the regulator determined that allowing a portion of funds to be reinvested in marketing could yield greater overall returns than immediate transfer to the distribution fund. The Tribunal found that this reasoning was supported by analysis and expert evaluation.

Procedural issues and delay

In addition to substantive arguments, the Tribunal noted procedural concerns relating to delay. The regulatory decision was published in August 2023, yet proceedings were not commenced until May 2025.

While the judgment ultimately turned on the merits of the subsidy claim, the panel indicated that the lapse of time presented additional difficulties for the applicants. Timeliness is an important consideration in public law challenges and subsidy control disputes, particularly where commercial arrangements have already been implemented.

The Tribunal’s observations suggest that future claimants in similar contexts will need to act promptly if seeking to challenge regulatory decisions.

Broader context of the Fourth Licence dispute

The case forms part of a wider sequence of litigation following the award of the Fourth National Lottery Licence. In March 2022, Allwyn UK was selected as the preferred applicant to operate the National Lottery from February 2024.

To facilitate the transition, Allwyn acquired Camelot’s UK operations from the Ontario Teachers’ Pension Plan in February 2023. A two year concession period was granted to enable an orderly transfer of stewardship.

Entities associated with Mr Desmond had previously sought to secure the Fourth Licence through The New Lottery Company. Following an unsuccessful bid, related proceedings were initiated in the High Court challenging aspects of the award process.

The present claim concerning the alleged £70 million subsidy must therefore be viewed within the broader context of ongoing legal scrutiny of National Lottery licensing decisions. However, the Tribunal confined its analysis strictly to the issues before it under the Subsidy Control Act 2022.

Legal implications of the ruling

The judgment provides clarity on several key points of law.

First, it confirms that regulatory decisions involving commercial assessments will not automatically be characterised as subsidies simply because they involve public interest considerations. The statutory test requires careful evaluation of whether a genuine economic advantage has been conferred from public resources.

Second, it affirms that the Commercial Market Operator principle can be applied even where no direct market comparator exists. In regulated monopoly contexts, the question remains whether the decision maker acted in a manner consistent with rational commercial judgment.

Third, it underscores the importance of evidence. The Tribunal attached weight to econometric modelling, independent expert advice and the reduction of the original funding request. The presence of documented analysis strengthened the regulator’s position.

Finally, the ruling illustrates the high threshold claimants must meet to overturn regulatory decisions in complex commercial sectors.

Conclusion

The Competition Appeal Tribunal’s dismissal of the £70.21 million claim brought by entities linked to Richard Desmond represents a significant affirmation of the regulatory framework governing the National Lottery. The Tribunal found no unlawful subsidy and concluded that the UK Gambling Commission acted within its statutory duties and commercial discretion when approving the marketing investment mechanism.

By confirming that the regulator’s decision did not contravene the Subsidy Control Act 2022, the judgment provides greater legal certainty for the operation of reinvestment mechanisms under lottery licences. It also reinforces the principle that regulatory bodies may adopt commercially rational strategies aimed at maximising long term returns for public benefit, even within a statutory monopoly structure.

While related legal proceedings concerning the Fourth Licence remain ongoing, this particular challenge has been resolved decisively. The ruling emphasises the importance of statutory interpretation, evidential rigour and procedural timeliness in subsidy control litigation. In doing so, it contributes meaningfully to the evolving jurisprudence surrounding public resource allocation and regulated commercial activity in the United Kingdom.

FAQs

What was the main allegation in the case?
The applicants alleged that allowing Camelot to retain £70.21 million for marketing purposes amounted to an unlawful subsidy under the Subsidy Control Act 2022.

Who brought the claim before the Competition Appeal Tribunal?
The claim was brought by entities associated with Richard Desmond including The New Lottery Company Northern & Shell and The Health Lottery.

What did the Tribunal ultimately decide?
The Tribunal dismissed the claim and found that the regulatory decision did not constitute a subsidy within the meaning of the legislation.

What is the Commercial Market Operator principle?
It is a legal test used to assess whether a public authority has acted in a manner comparable to a rational commercial operator.

Why was the National Lottery Distribution Fund mentioned?
The applicants argued that funds retained for marketing should instead have been paid into the Distribution Fund for allocation to good causes.

Did the Tribunal find evidence of unlawful state support?
No. The Tribunal concluded that the applicants failed to establish that the decision met the statutory definition of a subsidy.

How did the regulator justify the marketing investment?
The regulator relied on econometric analysis and independent expert advice indicating that marketing expenditure could increase overall returns.

Was timing an issue in the proceedings?
Yes. The Tribunal noted that the challenge was brought nearly two years after the decision was published.

Is further litigation ongoing regarding the National Lottery?
Separate High Court proceedings concerning the Fourth Licence award remain ongoing.

What does the ruling mean for future subsidy claims?
The judgment clarifies that claimants must provide strong evidence and cannot rely solely on the existence of a public interest element to establish a subsidy.