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Allwyn in ‘Advanced Discussions’ to Acquire Camelot’s UK for $115 Million
By Jeff Osienya Nov 06, 2022 IndustryThe upcoming UK National Lottery operator Allwyn, is considering taking over UK operations of its predecessor Camelot in a $115 million transaction. The former will be taking the helm of UK’s National Lottery in 2024 after Camelot’s 28-year reign.Allwyn Entertainment, UK’s next National Lottery operator, is in advanced talks with Camelot’s owner Ontario Teachers’ Pension Plan (OTPP), to acquire its UK business operations. As reported by Sky News, sources close to the negotiations said that Allwyn and OTPP might reach a deal valued at $115 million in the coming weeks. Additionally, it is believed that the UK Gambling Commission, which gave Allwyn the fourth lottery license, is aware of the talks.
Shortly after the rumors about the acquisition started, Allwyn confirmed that the talks were underway and the deal would be subject to regulatory approvals. Allwyn released a statement saying:
Quote“In response to speculation, we can confirm that Allwyn is engaged in advanced discussions with OTPP, which may lead to it purchasing Camelot’s UK operations. If an agreement were to be reached, it would be subject to regulatory approvals. Our shared objective is to reach an agreement which would best serve the interests of the many stakeholders of The National Lottery, in particular the good causes it supports as well as the employees of Camelot and Allwyn UK.”
When the deal is complete, Allwyn UK will operate and have access to Camelot’s earnings until it takes over the stewardship of the National Lottery in February 2024. Additionally, the deal would see Camelot withdraw its court case against the UK Gambling Commission and cooperate fully with Allwyn through the transition period.
The Battle to Run the National Lottery
In March, the UK Gambling Commission announced that Allwyn was the next custodian of the National Lottery, ending Camelot’s tenure that lasted nearly three decades. Fearing for its future, Camelot, and its gaming partner, IGT Plc, filed a legal challenge against the Commission’s decision to award Allwyn the fourth National Lottery license.
In their defense, Camelot claimed that the Commission’s evaluators had flagged the ballooned revenue estimates by Allwyn. In addition, Camelot accused UKGC of breaking the law by discarding their score that measures the bids during the Fourth National Lottery Competition. Therefore, the plaintiff insisted that were it not for the Commission making a “manifest error,” they would have won the license. In early June, the High Court ruled in favor of Camelot, halting plans to begin Allwyn Entertainment’s transition process as the next operator.
In response to allegations made by Camelot, the Gambling Commission said:
Quote“We have taken every step possible to ensure a level playing field for all interested parties, to enable us to appoint a licensee who will engage and protect players, run the National Lottery with integrity, and ensure the National Lottery maximizes support for good causes and its contribution to society through further innovation and investment.”
However, tables turned in late June when the High Court lifted the suspension it had initially placed on handing over the reins of the UK National Lottery to Allwyn. But still, Camelot vowed that it would fight on in the courts of flaw. Come September, Camelot withdrew its licensing appeal after media reports indicated the lengthy court case would affect money going to the Good Causes fund. However, they proceeded with compensation claims against the Gambling Commission.
Allwyn Plans to Halve Lottery Ticket Prices & Double Good Causes Funding
The United Kingdom’s National Lottery is one of the biggest globally. Since its debut in 1994, the Good Causes fund has received £46 billion collectively from National Lottery activity.
Due to dwindling sales, when Allwyn Entertainment takes over the lottery operations, it plans to halve the lottery ticket prices for the main draw to £1, which is half its current price. According to Camelot, lottery ticket sales last year were north of £8 billion following a stellar H1, but the figures had dropped for the first time in five years.
Last month the current chairman of Allwyn, Justin King, noted that when Allwyn Entertainment takes over from Camelot, the sales growth will mean money allocated to good causes will also increase by more than two folds. He also mentioned that after Allwyn takes over, they will develop an advanced technology platform to enhance player protection for the next ten years and beyond.
Allwyn is already working on the National lottery transition process by bringing the talented Victoria McKenzie-Gould and Sharon Doherty on board as non-executive directors. Additionally, the new operator, expected to begin its reign in 2024, has already started opening offices at Camelot UK’s headquarters in Watford.
It’s worth pointing out that even without the acquisition, it was expected that Allwyn would absorb most of the people employed by Camelot. However, after the acquisition of Camelot is complete, it is not clear whether the UK Gambling Commission will expect Allwyn to have independent governance arrangements for its UK business. The company is currently headquartered in Switzerland and is the largest lottery operator in Europe. Besides its flagship lottery product in its domestic Czech home market, Allwyn operates Lotteries Austria, Loto Gioco’ Italia in Italy, and OPAP in Greece and Cyprus.
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