The New Lottery Company Limited & Anor v The Gambling Commission

In a procurement challenge under the Concession Contracts Regulations 2016, the court’s role is supervisory. It must identify a clear and material error, breach of equal treatment or transparency, misuse of power, or a decision outside the contracting authority’s discretion. It must not re-evaluate competing tenders.

The reasonably well-informed and normally diligent tenderer is the objective standard for interpreting tender documents and assessing transparency. Phase-one feedback need identify material weaknesses capable of causing failure, but need not catalogue every criticism.

For contract modifications, substantiality requires comparison of the original and modified contract as a whole, in their factual context. A modification is not substantial merely because it gives the concessionaire additional flexibility or possible revenue.

The claimants challenged the Gambling Commission’s award of the Fourth National Lottery Licence to Allwyn under the Concession Contracts Regulations 2016. They alleged manifest errors, undisclosed criteria, inadequate feedback, unequal treatment, conflicts of interest and an unlawful incumbency advantage.

They also challenged modifications made to the Enabling Agreement and Fourth Licence, alleging that the modifications were substantial or foreseeable and therefore required a fresh competition. The claims sought damages exceeding £1 billion and other relief.

The central issues were whether the Commission had acted unlawfully in conducting the competition and whether the modifications could be made without a new concession award procedure.

1. Process Claim dismissed. The Commission applied the published criteria and reached conclusions within its broad evaluative discretion. The claimants failed to establish any material manifest error in the Pass/Fail assessments of TNLC, Allwyn or Camelot.
2. The court’s role was limited to review. It would not substitute its own assessment for that of the Commission. A reasoning error did not necessarily invalidate the resulting score. The claimants had to show that the decision or score itself was clearly and materially wrong.
3. The ITA and associated documents were to be interpreted objectively by reference to the reasonably well-informed and normally diligent tenderer. The Commission’s phase-one feedback was not required to identify every possible weakness, but it had to make material weaknesses capable of causing failure apparent. The feedback given to TNLC met that standard.
4. No undisclosed criteria were applied. References to unaffordable play, resources supporting the Chief Compliance Officer, Best Practice and detail in the mystery-shopper proposal were within the published requirements.
5. The Commission did not breach equal treatment in assessing the bidders. Different treatment was justified by the different bids and the holistic Pass/Fail evaluations. There was no apparent conflict of interest arising from Rothschild’s earlier work for Allwyn. The Commission’s measures concerning Camelot’s incumbency advantage were proportionate and adequate.
6. Modifications Claim dismissed. The court held that the appropriate date for assessing foreseeability under regulation 43(1)(c)(i) was the date of award, September 2022. The litigation and transition difficulties were foreseeable, but the modifications were not substantial under regulation 43(9).
7. Under regulation 43(9)(b)(ii), the claimants bore the burden of proving on the balance of probabilities that the modifications would have allowed acceptance of a different tender. They failed to do so.
8. Under regulation 43(9)(c), the court compared the original and modified contracts as a whole and considered the factual context. The modifications did not shift the overall economic balance in Allwyn’s favour in a manner not provided for in the original contract.
9. Even if there had been a breach, TNLC had no real or substantial chance of winning a fresh competition. The damages claim was also time-barred under regulation 53(2). Both claims were dismissed.