The company decided to bring in a new supplier of the IT systems that power the lottery but the changeover has been repeatedly delayed and is expected to be pushed back again in the coming weeks.
The tech switchover is crucial to Allwyn’s plans to introduce new games, which it claims will enable it to double the lottery’s contributions to good causes from £17bn to £34bn by the end of the 10-year licence.
It is understood that the regulator’s climbdown is being driven by an expectation that the deadline for the IT upgrade will have to be extended again. It is believed that the commission does not want to have to grant an extension while Mr Desmond’s legal action is hanging over it.
Officials are said to be concerned that another postponement would be seized upon by Mr Desmond to support his claim that it was a mistake to award Allwyn the licence, and also that the regulator failed to run a proper auction process.
Mr Desmond’s Northern and Shell group filed a procurement lawsuit against the Gambling Commission in February over the decision, and at a High Court hearing in June it branded the process “seriously flawed”, accusing the Commission of providing “unfairly favourable treatment to Allwyn”. He has also previously questioned Allwyn’s suitability, telling the Financial Times last year: “They have no experience in the UK.”
Industry figures say Allwyn’s new systems should have been ready when it took over the licence in February. However, Robert Chvátal, the group’s chief executive, warned that the switchover would be delayed until the summer even before taking over the licence.
The company missed the summer deadline and has been quietly working to a new date of February 2025. Some insiders insist that will be missed too and say it is likely to take until at least next summer to complete the tech changeover. The slipping timetable will deepen concerns about the knock-on effect on charity donations to good causes.
Allwyn has previously blamed the setback on a legal dispute with the incumbent IT provider, International Games Technology. IGT mounted a legal challenge to Allwyn’s actions that was dismissed in the High Court in 2023, but the company continued to pursue Allwyn for damages until January of this year.
It is feared that long delays will leave Allwyn unable to meet its highly ambitious fundraising forecasts. The company is already behind on its sales projections, with turnover on course to be markedly short of where Allwyn bosses predicted it would be in the first year. It is expected to be many hundreds of millions below the £8.2bn that previous operator Camelot delivered in its final year.
The National Lottery is both one of Britain’s most lucrative public sector contracts and the country’s largest distributor of charity funds, providing vital funding for sports, heritage and good causes across the UK.
A Gambling Commission spokesman said: “In accordance with the order of the court, at all stages the parties must consider settling this litigation by any means of alternative dispute resolution. Naturally, the commission will continue to have regard to those requirements.”
An Allwyn spokesman said: “We are investing more than £350m in the biggest technology upgrade in the National Lottery’s history, and we are working towards switching over from the existing legacy systems to our new modern platform. Once it is live, we will be able to transform the way customers play the National Lottery and crucially, drive even more returns to good causes.”
A spokesman for Mr Desmond declined to comment.