Camelot UK Lotteries Ltd, R (on the application of) v The Gambling Commission & Ors

A non-commercial society does not cease to qualify under section 19 of the Gambling Act 2005 merely because it employs a commercial external lottery manager whose services generate private profit. The relevant question concerns the society’s purposes, not the manager’s profits, although excessive charges may engage the statutory controls on lottery profits.

Separate societies remain separate legal entities for the statutory proceeds limits. Common directors, a common external lottery manager and common branding do not alone justify aggregating their lotteries or piercing the corporate veil. Whether the scheme operates fairly and openly is primarily a matter for the specialist regulator.

Camelot, the licensed operator of the National Lottery, sought judicial review of the Gambling Commission’s refusal to conduct a statutory review of licences associated with the Health Lottery scheme. The scheme involved multiple community interest companies, each licensed to promote a society lottery, with their lotteries managed by a common external lottery manager.

Camelot alleged that the companies were commercial societies, that the scheme was in substance one lottery exceeding the statutory limits, and that the Commission had unlawfully limited its review. The claim was brought after the licences had been granted and after substantial investment and operation of the scheme.

1. Permission and amendment. The court refused permission to proceed with the original judicial review claim because Camelot had delayed considerably after the relevant facts and alleged grounds were known, and because the claim had no real prospect of success. Permission to amend was also refused because the amended grounds had no real prospect of success.
2. Sections 98 and 19. Section 19 of the Gambling Act 2005 focuses on the purposes of the non-commercial society. A society may employ a commercial external lottery manager and may thereby contribute to the manager’s commercial success. That does not itself make the society commercial or infringe section 19. The legality of the scheme does not depend on who first proposed it or on the subjective intentions of those devising it, but on the scheme’s terms and operation.
3. Fees and lottery profits. Sections 254 and 260 provide a statutory control where an external lottery manager receives more than the reasonable costs of organising the lottery. Excessive deductions may result in profits being used for an unauthorised purpose and may constitute an offence. Provided the charges are reasonable, the manager’s profit does not prevent the societies from holding operating licences.
4. Multiple lotteries. The community interest companies were separate legal entities. Their common directors and common external lottery manager did not, without fraud or other sufficient basis, justify piercing the corporate veil. Where each week’s lottery was promoted for a different company, there was no legal basis merely from those common features for aggregating proceeds towards the annual limit in section 99(3).
5. Regulatory judgment. The Commission was entitled initially to grant licences on the basis that the proposed scheme was capable of compliance, while requiring it to operate as separate lotteries. Fairness and openness, including whether purchasers understood which society’s lottery they entered, were matters within the regulator’s statutory judgment. The Commission’s continuing review addressed those issues, and no unlawful failure to include the further issues identified by Camelot was established.
6. The question whether multiple society lotteries should be permitted was principally a matter for Government or Parliament. The claim and amended claim were dismissed at the permission stage.