Allwyn Entertainment, the next operator of the UK National Lottery, has bought its rival and the current operator Camelot UK. The potential acquisition came to light late last month, but has reportedly found its way to the finish line, according to an Allwyn press release.
The value of the deal is around £100 million (US$117.91 million). It’s money well spent, as Allwyn will also put to bed a bitter legal dispute with the lottery operator.
This past March, the UK Gambling Commission (UKGC) gave control of the National Lottery License, which Camelot has held since 1994, to the Czech-based company. The decision inflamed the Ontario Teachers’ Pension Plan (OTPP), the entity behind Camelot, as well as gaming tech provider IGT. However, the acquisition will put out those flames.
Time To Bury the Hatchet
Camelot launched a challenge in April following the regulator’s decision. But, the UKGC advised it that the lawsuit could delay the handover, adding that the victims would be the causes the lottery is supposed to help.
Camelot was planning to sue for compensation in excess of hundreds of millions of dollars. However, the UKGC’s advice found its mark, and OTPP dropped the lawsuit.
That will allow the friction to die down and pave the way for a smoother transition. The UKGC still has to approve the purchase, but that should be just a formality.
Most of Camelot’s 900 employees are due to transfer to Allwyn when the license changes hands. That transition will take place in early 2024.
Allwyn isn’t covering the purchase out of its own pocket. It announced at the end of last week that it had secured a new credit line worth €1.6 billion (US$1.63 billion) from a series of financial institutions.
The company will receive the money through different channels. €441 million (US$451.36 million) will come through amortizing term loans that are due in 2027. A similar amount of funds comes through bullet term loans due the following year.
Another €300 million (US$307.05 million) will be provided through a revolving credit facility due in 2027, as well. The remainder will come through a multipurpose facility, with the funds made available through guarantees or term loans. These will also mature in 2027.
Allwyn added that it will use the money to pay down existing debt and refinance certain credit facilities. UniCredit was the Global Coordinator. Clifford Chance was Allwyn’s legal adviser and Allen & Overy were the lenders’ counsel in the debt deal.
Changes Coming to the UK
By the time Allwyn takes over the lottery, the gaming landscape in the UK could look very different. The country is now in a recession, an acknowledgment both Chancellor Jeremy Hunt and the Office for Budget Responsibility (OBR) have made.
The OBR also admits that the UK’s debt is £400 billion (US$471.28 billion) higher than the government expected this past March. Inflation is running higher than at any time in recent history, reaching a 41-year high of 11.1% in October.
As a result, discretionary spending is on the decline, as well. While some might turn to lottery products in an attempt to counter a reduction in options, most people opt to cut back on gambling as an unnecessary expense.
Things could get worse before they get better. The UK’s newest prime minister, Rishi Sunak, has made it clear that the country is going to follow its own path, not that of the European Union (EU). In a press conference today, he said that he will “not pursue any relationship with Europe that relies on alignment with EU laws.”
That means the UK could be looking at reinventing the wheel in certain circumstances. However, the country’s goal right now is to see Brexit through to the end as it tries to put its house in order.
If there’s any good news for lottery players out of all of this, it’s that Allwyn has one significant change in mind. It wants to drop the Lotto price from £2 to £1. (US$2.36 to $1.18).
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