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High Court dismisses Camelot action seeking removal of rival Health Lottery's licence

The High Court has dismissed a court challenge by Camelot, operator of the National Lottery, which was seeking to have the gambling licence for its rival the Health Lottery revoked.24 Aug 2012

In his leading judgment, Lord Justice Burton said that Camelot did not have a "real prospect of success" in its claim that the Gambling Commission, which regulates 'society lotteries' but not the National Lottery, should have revoked the licence of its competitor.

The Health Lottery operates on behalf of 51 separate organisations, known as 'society lotteries'. Camelot argued that each of those organisations "in reality has no independent existence", putting the Health Lottery against the National Lottery Act which allows for one single national operator.

However, the Gambling Commission argued that as the relevant legislation "permits multiple society lotteries such as the Health Lottery to lawfully exist", Camelot's was a "political complaint ... best addressed to Parliament and not to the Courts".

Camelot has also been guilty of "undue delay" in bringing its proceedings, which did not begin within three months of the grounds for the claim arising, the judge said. He said that the relevant facts regarding the new lottery were available when it was initially announced, in February 2011; particularly since the company must have been aware that "substantial expenditure was being made to launch the Health Lottery" in October. Camelot eventually brought its case the following November.

"It is true that the [separate lotteries] are under common control," he said. "They are however separate legal entities. To treat them as one involves piercing their corporate veils. It is not suggested that they are operated for fraud or in a fraudulent manner; nor could it be. It is not suggested that their assets are applied otherwise than for the purposes permitted by their individual Articles of Association ... The fact that they have common directors does not of itself justify their being treated as if they were a single corporate entity."

He said that although this did not necessarily mean that the lotteries were conducted "fairly and openly", this was a question for the regulator, which was "entitled to take the view" that they were open and fair on the evidence.

"I agree with the Commission that the question whether multiple society lotteries should be permitted is a political question, to be determined by the Government or Parliament," Lord Justice Burton concluded. "Multiple society lotteries are not prohibited by the Act. The Commission has correctly determined that the real question relating to the Health Lottery is whether it in practice satisfies the licensing objective of fairness and openness, given the misleading widespread public perception of a single lottery benefiting a single society."

In a statement, Camelot said that the decision was "legally-flawed and unfair". Confirming that it intended to appeal the decision, it said that by allowing the Health Lottery to set up "multiple society lotteries" the Gambling Act allowed its competitor to "position itself as a direct rival to the National Lottery".

"It is now imperative that the Government acts to close this loophole and to ensure that the law mirrors the intention and will of Parliament that there should be only one National Lottery," Dianne Thompson, Camelot's chief executive, said. "Time is of the essence - the longer the period of political inaction, the more incentive there is for other commercial operators to establish similar mass-market lotteries that would effectively cannibalise National Lottery sales and returns to the Good Causes."

In a statement on its website the Gambling Commission "welcomed" the decision.

"The review looked at alleged failures by the Commission to take appropriate regulatory action in relation to the Health Lottery," it said. "The court has supported both the Commission's interpretation of the law and its approach to the compliance of the Health Lottery and its constituent parts."

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