National lottery operator’s ties with Russia deemed ‘irrelevant’ by the UKGC

Garance Limouzy July 16, 2024

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National lottery operator’s ties with Russia deemed ‘irrelevant’ by the UKGC

Allwyn, the company that operates the UK national lottery, faced pressure to sever ties with Russia following public scrutiny in recent years. Newly released information reveals that the United Kingdom’s Gambling Commission (UKGC) was aware of these ties when selecting Allwyn during the tender process and deemed them “irrelevant”.

A ￡6.5bn contract

In 2022, Allwyn was awarded the 10-year licence to operate the UK lottery, which represents a ￡6.5bn contract.

Allwyn, a multinational lottery operator,?is owned by Karel Komárek, a Czech tycoon, through his holding company KKCG. This?parent company, as it was disclosed in 2022,?had?ties with Russian enterprises, including the Russian energy giant Gazprom: KKCG?owns Moravia Gas Storage (MGS), which had a 50/50 partnership with the state-owned Russian corporation.

The decision to appoint Allwyn drew criticism from many MPs who argued that such a significant public sector contract should not be awarded to a company with ties to Russia.

After Allwyn was selected as the new operator of the national lottery, and following the invasion of Ukraine, UK MPs demanded that the company sever all ties with Russia. The Gambling Commission reassured the MPs?by stating that MGS would sever ties within days. However, it actually took almost two years for the company to dilute the stake held by Gazprom by issuing new shares. The remaining 2.63 percent stake still owned by the Russian energy giant will be bought back.

“This matter has finally been resolved but it is highly questionable why it took so long and deeply concerning that obtaining transparent information about one of the UK’s largest public sector contracts was so difficult,” declared Iain Duncan Smith, former Conservative leader, who chairs a parliamentary group focusing on gambling.

UKGC knew

Contrary to what Iain Duncan Smith said, the matter has not been fully resolved, as new information continues to emerge.

It has been recently disclosed that in March 2022, during the selection process, the United Kingdom’s Gambling Commission (UKGC) exchanged emails with Allwyn regarding the company’s ties with Russian state-owned companies. The UK Gambling Commission informed Allwyn that these links to Russia were not relevant to its application to operate the lottery.

The emails stated: “While the Commission does not regard either this shareholding or the joint venture as relevant to the Allwyn Entertainment Ltd Application to run the Fourth National Lottery Licence, it is likely that, as a consequence of this morning’s announcement of Allwyn as the Preferred Applicant, there will be increased political and media interest in both of these arrangements.”

Since 2022, MPs have been questioning the transparency of the process, criticising the UKGC’s tendency to be opaque when explaining their decisions regarding Allwyn’s appointment as the lottery operator.