A Third Subsidy Challenge: The Gambling Commission

A third challenge has been brought under the UK’s Subsidy Control Act 2022 (the ‘Act’). Stacey Gray, a Senior Associate in Square One Law’s Commercial team takes a closer look…

The Competition Appeal Tribunal (‘CAT’) will hear a legal challenge brought by The New Lottery Company Ltd, Northern & Shell Plc and Health Lottery ELM Ltd against the Gambling Commission. The case concerns an alleged £70.21 million subsidy awarded to Camelot UK Lotteries Ltd (‘Camelot’) in 2023 and represents the third challenge brought under the Act.

Case Overview

The notice of appeal, filed on 8 May 2025, disputes the Gambling Commission’s decision to allocate funds from the National Lottery Distribution Fund (‘NLDF’) to Camelot for marketing activities. The Gambling Commission approved the request in July 2023, awarding over £70 million for National Lottery promotional purposes. Given that the NLDF is primarily dedicated to funding good causes, the use of these funds for marketing activities has drawn scrutiny.

The New Lottery Company Ltd was established by Northern & Shell to compete for the fourth National Lottery licence. According to the notice of appeal, Camelot was the operator of the National Lottery under the third licence until 1 February 2024. The fourth licence was awarded to Allwyn Entertainment Limited (‘Allwyn’) in September 2022 and took effect on 1 February 2024. In February 2023, Camelot was acquired by the Allwyn group. Following this acquisition, Camelot and Allwyn have been persons under common control within the meaning of section 8 of the Act and together constitute an “enterprise” under section 7(1)(b) of the Act.

The notice of appeal further highlights that the National Lottery operates in a competitive sector, facing competition from “synthetic lotteries,” including unregulated “shadow lotteries” operating outside the UK, and regulated “society lotteries” licensed under the Gambling Act 2005—such as the Health Lottery operated by Northern & Shell Plc. The National Lottery also competes more broadly within the wider gambling market.

Economic Advantage

The notice of appeal states that the Gambling Commission’s decision granted financial assistance to Camelot—and thereby to Allwyn, as Camelot’s owner and the incoming National Lottery operator—which conferred an economic advantage. This funding enabled Camelot to market and promote the National Lottery, strengthening its competitive position in relevant markets. As Camelot and Allwyn are treated as a single enterprise under the Act due to common control, both benefited from the funding.

Legal Grounds

The appellants submit that the Gambling Commission’s decision should be subject to judicial review on the following grounds:

• Failure to recognise the funding as a “subsidy” within the meaning of the Act, and consequently not applying the subsidy control principles mandated by the legislation.
• Even if the payment qualifies as a subsidy, it does not meet the conditions of the subsidy control principles outlined in Schedule 1 of the Act.
• The Gambling Commission lacked statutory authority to allocate funds from the NLDF for these purposes.

The CAT will determine whether the Gambling Commission acted lawfully in awarding the funding and whether the payment constitutes an unlawful subsidy under UK law.

Timeline of Subsidy Control Challenges

1. Durham Company Limited v. Durham County Council (2023): The first challenge under the Act. The CAT ruled that Durham County Council did not grant a subsidy by using resources from its household waste collection service to support its commercial waste collection service, as the economic benefit did not move between separate entities.
2. Greater Manchester Combined Authority (GMCA) Loan Challenge (2024/2025): The second challenge, involving a £140 million loan provided by GMCA to property development companies. The appellant is arguing that the loans are not on market terms and therefore constitutes an unlawful subsidy. The CAT is currently considering this case.
3. The New Lottery Company Ltd & Others v. Gambling Commission (2025)
   The third challenge under the Act, contesting the Gambling Commission’s approval of a £70.21 million payment to Camelot for marketing. The notice of appeal was recently filed with the CAT (and the subject of this article).

For the full details see the Notice of Appeal at: 1730/12/13/25 The New Lottery Company Ltd and Others v the Gambling Commission – Summary of appeal | 9 June 2025