Out of luck - U.K. lottery procurement challenge sees automatic suspension lifted

On 29 June 2022, the High Court lifted an automatic suspension (in three sets of joined proceedings¹) to allow the Gambling Commission to award a contract to the winning bidder following a procurement to run the UK’s national lottery.

The full judgment can be found here.

The Gambling Commission had run a procurement under the Concession Contracts Regulations 2016 (“CCR”). The procurement concerned the award of a statutory licence to operate the national lottery from 2024. Allwyn Entertainment Limited (“Allwyn”) was the successful bidder. The existing licence holder, Camelot UK Lotteries Limited (“Camelot UK”) supported by Camelot Global Lottery Solutions Limited (“Camelot Global”) and International Game Technology plc and others (“IGT”) had come second. All of these entities brought proceedings against the Gambling Commission. 

The proceedings triggered an automatic suspension of the award process, preventing the Gambling Commission from entering into an agreement or licence with Allwyn. The Gambling Commission applied for the automatic suspension to be lifted. It claimed it was not appropriate for the suspension to remain in place pending a full trial. The Camelot parties opposed the lifting of the suspension. 

The court lifted the automatic suspension, allowing the award of the lottery licence to be made to Allwyn.

The court determined the application to lift in accordance with the American Cyanamid principles:

1. Is there a serious issue to be tried?
    
2. Would an award of damages be an adequate remedy for either party if the suspension was lifted/ maintained?
    
3. If there is doubt as to the adequacy of damages for either party, where does the balance of convenience lie? (which course of action is likely to carry the least risk of injustice if the decision made is wrong)

The court held:

1. There was a serious issue to be tried. This included whether Camelot Global’s claim was time barred (outside of the 30 days of the date it knew or ought to have known of grounds for the claim) and whether it had acquired the requisite knowledge to commence proceedings at the same time as Camelot UK, given both entities were part of the same corporate group. There was also an issue over whether some of the IGT subcontractors bringing a claim had the relevant standing to do so (whether those subcontractors were owed a duty under the CCR which would, in turn, given them the right to seek a remedy under the CCR).
    
2. Damages would be an adequate remedy for the Camelot parties. The loss of Camelot’s UK business could be quantified. Also, its current business was limited to the current operation of the national lottery until 2024 and this would remain unaffected. There was no evidence that its reputation would be harmed or that its ability to win future contracts would be harmed. For IGT, it was held that its potential losses fell within the normal risk of losing a competitive tender and could be quantified. 
   Damages would not be an adequate remedy for the Gambling Commission. If the suspension was maintained there would be a delay to the start of the new licence. This would result in losses that would be difficult to quantify and would not be compensatable in damages. 
    
3. The balance of convenience lay in lifting the suspension and allowing the award of the licence to go ahead. Even if an expedited trial took place (October 2022), there would still be a delay to the commencement of the new licence and the benefits that would bring.

Comment:

Although we have recently seen some cases where the court has maintained the automatic suspension (Draeger Safety UK Ltd v London Fire Commissioner [2021] EWHC 2221 (TCC) and Vodafone Ltd v Secretary of State for Foreign, Commonwealth and Development Affairs and another [2021] EWHC 2793 (TCC)), these latest cases appear to revert to the status quo of a court being reluctant to delay the award of a contract to allow a trial to take place. They also highlight the difficulty that challengers face when offering services on commercial terms, to demonstrate that damages will not be an adequate remedy if the automatic suspension is lifted. 

For more information or advice, please contact David Hansom (david.hansom@clydeco.com) or Hannah Chapelhow (hannah.chapelhow@clydeco.com) in Clyde & Co's procurement law team

¹ Claim HT-2022-000106: Camelot UK Lotteries Ltd v Gambling Commission v (1) Allwyn Entertainment Limited (2) Sazka Group AS

Claim HT-2022-000113: (1) International Game Technology Plc (2) IGT Global Services Limited (3) IGT Global Solutions Corporation (4) IGT (UK3) Limited (5) IGT UK Interactive Limited (6) IGT UK Limited v Gambling Commission v (1) Allwyn Entertainment Limited (2) Sazka Group AS

Claim HT-2022-000154: Camelot Global Lottery Solutions Ltd v Gambling Commission v (1) Allwyn Entertainment Limited (2) Sazka Group AS [2022] EWHC 1664 (TCC), 2022 WL 02343237