Camelot threatens Gambling Commission with judicial review over Health Lottery

The National Lottery operator Camelot is threatening the Gambling Commission with a judicial review within days unless it shuts down upstart competitor The Health Lottery, run by the Daily Express proprietor Richard Desmond.

Camelot stepped up the battle with its newest rival 10 days ago by writing to the Commission to spell out its intentions. In the letter, a copy of which has been seen by The Independent, Camelot wrote that it “proposes to challenge the Commission’s continuing failure to take regulatory action to suspend or revoke the… licences currently held by The Health Lottery.”

The company is angry that Desmond, who also owns Channel Five and a string of adults-only satellite TV channels, has avoided being regulated as a national lottery by setting up a regional network of society lotteries operating under a single brand. As well as donating just 20p in the pound to charities, compared to Camelot’s 28p, it means The Health Lottery avoids paying the 12p of duty per ticket that the National Lottery gives to the Exchequer.

Camelot fears the precedent could spark a rash of copycat draws, hitting its business. Since it launched in 1994, it has poured cash into good causes including museums, the Olympics and film-making, as well as doling out more than £40 billion in prize money.

The letter went on: “The Health Lottery represents a particularly blatant example of an attempt to commercialise ‘society lotteries’ on an industrial scale in a way that cuts across both the spirit and the letter of the (Gambling) Act and associated regulation.”

The Gambling Commission and the National Lottery Commission – Camelot’s regulator – are already exploring the impact of society lotteries after the Culture Secretary Jeremy Hunt raised his concerns in the wake of The Health Lottery’s launch last autumn. The company is also being looked at by the Advertising Standards Authority.

The letter added: “As the licensed operator of the National Lottery, Camelot is tasked with maximising returns to the good causes in a socially responsible way and is very concerned that those returns should not be adversely affected by a scheme which evidently seeks to operate unlawfully as a large scale lottery, but without any of the corresponding safeguards or obligations towards good causes.”

Even before launching The Health Lottery, Desmond was known for his philanthropy. Two years ago, he calculated he had given £40m to charity in the preceding five years. That sum included contributions from Northern & Shell, his holding company, as well as cash raised from charity gigs by the RD Crusaders, the rock group he formed with Roger Daltrey in which Desmond plays drums. In a recent interview, he expressed a desire to raise £50m in The Health Lottery’s first year of operation.

A spokesman for The Health Lottery said: “This is an issue between Camelot and the Gambling Commission. We have seen nothing new in the arguments put forward and we believe this is without merit. There is no judicial review taking place and we do not believe that there are any grounds for judicial review.”

Camelot said: “We can confirm that we have been in correspondence with the Gambling Commission over recent months requesting that it takes appropriate regulatory action against The Health Lottery, whose operation we consider to be unlawful. As we have not received a satisfactory response, we have now written to the Commission again to notify it of our intention to challenge, by way of judicial review, its continuing failure to take regulatory action. We have requested a response within 14 days, in the absence of which we have reserved the right to issue judicial review proceedings without further recourse to the Commission.

“Having first raised the issue of the lawfulness of The Health Lottery with the Commission in October last year shortly after the lottery’s launch, and subsequently in further correspondence, we believe that the Commission has had ample opportunity to address our concerns. We are therefore disappointed that it has failed to do so to date.”

A Gambling Commission spokesman said it was considering Camelot’s correspondence and would respond in due course.