Allwyn Aims for Success with New Lottery Deal
Allwyn, since assuming the role of National Lottery operator 18 months ago, has experienced notable success. The EuroMillions lottery has seen an impressive four jackpot rollovers recently, a significant factor contributing to increased ticket sales. In their September financial report, Allwyn International cited “favourable jackpot cycles” as a main reason for a 14% year-on-year revenue increase.
Merger with Opap: A Strategic Move
Shortly after, Allwyn announced a merger with Opap, a well-known Greek gaming company. This merger positions Allwyn as the second-largest gambling company in the world, commanding a valuation of £13.8 billion. Karel Komárek, the founder of Allwyn and a private figure, sees this merger as a pinnacle achievement in his business journey.
Building a European Gaming Empire
Komárek’s path to success started in 2012 when he acquired lottery rights from Sazka after its bankruptcy for under £150 million. He leveraged this acquisition to build a significant European gaming presence that surpasses his previous oil and gas investments.
With the Opap acquisition, Komárek’s investment firm, KKCG, will hold 85% of the voting rights in the new entity. This move also paves the way for a public listing on the Athens Stock Exchange, with future ambitions for listings in London or New York. This strategic access to equity aims to enhance Allwyn’s expansion plans, particularly within the U.S. market, with goals to overtake competitors like Flutter.
Legal Challenges and Accusations
However, Allwyn’s journey has not been without hurdles. The UK arm is currently engaged in a legal battle lasting over seven weeks. Richard Desmond, associated with Northern & Shell publishers, is contesting the National Lottery licensing process, seeking £1.3 billion in damages. His claims suggest the bidding process was flawed, and he argues that Allwyn has breached commitments outlined in its bid contract.
Desmond’s allegations also question Allwyn’s suitability as an operator, citing connections to Russian businesses, including a joint venture with Gazprom. These legal challenges have become particularly complex due to the involvement of Rothschild, which previously advised Allwyn before becoming the Gambling Commission’s advisor for the bidding process.
The Bidding Landscape
Allwyn’s bid included prominent figures, such as Sir Keith Mills, known for organizing the London 2012 Olympics, and Justin King, former head of Sainsbury’s. Before losing its license in 2022, Camelot, Allwyn’s predecessor, believed it was well-positioned to retain its role. However, changes in bid conditions prior to the decision worked against Camelot, leading to legal disputes that have since concluded after Allwyn acquired its rival.
Ambitious Goals and Initial Performance
Allwyn’s initial objectives included a pledge to double funding for good causes to £38 billion over the next decade. In its first year, the total raised was £1.8 billion, which aligns with Camelot’s performance but falls short of expectations. Nonetheless, the National Lottery Distribution Fund remains optimistic, committing substantial funds for intermediary partnerships, including £20 million for Propel and £30 million for The Phoenix Way.
Retail Relations and Technical Challenges
Not all stakeholders have expressed satisfaction. Allwyn’s introduction of new gaming terminals faced backlash from retailers, with complaints about usability and functionality. Jason Byrne, who operates a post office in Devon, described the transition as a “complete shambles.”
Despite these challenges, Allwyn maintains it has more than 43,500 retail partners and is actively working to address the reported issues. They emphasize that promotional efforts have effectively attracted new players.
According to an Allwyn spokesperson, the company is pleased with its performance in the current year, thanks to exciting EuroMillions draws. The goal remains to double contributions to good causes from £30 million weekly to £60 million by the end of the current license period.
