The National Lottery may be one of the new PM’s trickiest issues

It might not seem a big problem in a world of soaring fuel bills, the climate crisis and NHS pressures, but this vital source of funding is under threat, writes Chris Blackhurst

The British institution is at the centre of an ownership row (Getty)

Forget basking in triumph. No sooner does the new government begin, than realpolitik kicks in.

One of the trickiest issues coming up fast is the National Lottery. It may seem absurd, talking about the jackpot draw and scratch cards in the context of war in Ukraine, cost of living, soaring fuel bills, immigration, the climate crisis, NHS pressures, strikes and myriad other major issues. But the Lottery matters to many people; it’s a vital source of funding for bodies that would struggle, especially now, in even more straitened times; and amid the doom and gloom, the game holds out hope, a bit of fun which, who knows, may just make them a multi-millionaire.

Those who supposed the future of the Lottery was decided back in March, when the 10-year operating licence was awarded to Allwyn Entertainment, deposing the incumbent Camelot, may want to think again.

On 7 September, shareholders in a special purpose acquisition company or Spac will vote in New York on an agreed merger with Allwyn. The effect of the deal will see Allwyn list its shares in New York.

This is where the headache for the new culture, media and sport secretary begins. Gary Cohn – it’s his Spac called Cohn Robbins – will sit on the new board. Cohn, ex of Goldman Sachs, is a former White House adviser to Donald Trump.

Under the terms, too, an investor from the Czech Republic, named PPF, will hold 5 per cent of the newly listed company. PPF has agreed to provide “backstop” support to the listing, injecting $260m (£224m) in return for 4.99 per cent. Czech is fine. However, this is a Czech firm with ties to Russia.

PPF has sold their banking assets in Russia but still hold substantial commercial properties in Moscow, one of Russia’s biggest life insurers, and a stake in a mining company. They were formerly a co-investor with the now-sanctioned Oleg Deripaska.

It’s all a bit awkward for the new head of the Department for Culture, Media and Sport (DCMS), and for Allwyn, which likes to present itself as squeaky clean and entirely wholesome, employing Lord Sebastian Coe and Sir Keith Mills, both of whom sat on the London 2012 Olympics organising committee, to do its UK bidding.

The float will see Allwyn’s owner, billionaire Karel Komarek, make around $750m (£648m) – this, well before the UK national lottery contract comes on stream.

The Lottery matters to many people. Amid the doom and gloom, the game holds out hope, a bit of fun which, who knows, may just make them a millionaire

Komarek has his own Russian associations. His KKCG Group runs a business that has a gas storage joint venture with Russia’s Gazprom in Czech’s Moravia region. Komarek has said he will end the partnership with Gazprom but will not risk denying Czech citizens their fuel in winter so the Czech-Russia union remains. Talks to remove Gazprom continue apparently.

Allwyn, naturally, is keen to downplay the Russian end, saying it condemns the invasion of Ukraine and claiming PPF will have no say in the running of Allwyn in the UK.

Meanwhile, another date is quickly looming: 13 September is when Camelot’s appeal against a judge’s decision to begin the lengthy process of transition from Camelot to Allwyn is heard (Allwyn is not due to take sole charge until 2024). A full trial of the original Gambling Commission awarding of the licence to Allwyn is scheduled for January.

Camelot, which has run the Lottery since its inception in 1994, may claim damages, which could amount to as much as £600m. MPs on the DCMS select committee have been told by Andrew Rhodes, chief executive of the Gambling Commission, that he does not know whether Camelot would go ahead with such a claim. But he said that in the event the move was successful, the money could be taken from the fund used for distributing income from National Lottery sales to good causes.

Rhodes said, “It is almost impossible to calculate an accurate figure.” He said: “It would be a matter for the secretary of state at DCMS to decide where any damages do get paid from. One possible fund would be the one that you described [good causes]. It is also possible it could come from somewhere else.”

Critics complain that Camelot is trying it on and point out that the existing operator is owned by a Canadian teachers’ pension fund and should not be receiving compensation from the UK for losing the lottery. The Conservative MP Julian Knight, who chairs the DCMS committee, said Camelot had “some brass neck”, adding that any damages claim, “could basically rob the futures of young people across this country by taking such huge sums from good causes”.

Set against Allwyn’s Russia connections, however, this flag-waving appears ludicrous. Alex Davis-Jones, shadow DCMS secretary, certainly thinks so, tweeting that the Russian link is “extremely worrying.” Adds Davis-Jones: “The National Lottery is a much-loved and respected British institution and must remain that way.”

This row, and the attendant difficulty for the new government and its DCMS secretary, is only just beginning.