National Audit Office to Examine the National Lottery Licence Award as Good-Cause Payments Fall 22%

The public spending watchdog will test whether the licence Allwyn won was designed, awarded and overseen to maximise returns to good causes, and report in spring 2027. The latest quarter's payments to good causes were 22.2% below a year earlier.

• The National Audit Office (NAO) has opened a study of the Fourth National Lottery Licence, which Allwyn has held since February 2024, and lists it as scheduled for spring 2027
• It will examine how the Gambling Commission and the Department for Culture, Media and Sport (DCMS) designed and awarded the licence, oversaw the transition, and are applying the lessons
• Payments to good causes were £377.2 million in April to June 2026, down 22.2% on a year earlier, and about £1.8 billion for 2025 to 2026, according to the Commission
• The courts have already found the competition lawful, rejecting The New Lottery Company's claims in April and its bid to appeal in July
• Allwyn UK has been under interim leadership since Andria Vidler stepped down, and the Commission has an acting chief executive

The Watchdog Will Test the Design, the Award and the Handover

The NAO's work-in-progress page, which NEXT.io reported on 15 October, says the study "will examine whether the Gambling Commission has designed, implemented and overseen the fourth National Lottery licence effectively to maximise returns to good causes and deliver long-term public value". It asks whether the Commission and DCMS designed and awarded the licence to support successful delivery, oversaw the transition to the new operator effectively, and have identified and applied lessons for delivery through to 2034 and for future lottery licensing.

The study is scheduled for spring 2027, led by director Simon Bittlestone and study manager Callum Saunders. The page notes that the licence, which runs from 2024 to 2034, introduced a new operating model intended to raise returns to good causes and give the operator more flexibility to innovate, and that the 2022 award to Allwyn Entertainment Limited was the first change of operator since 1994. The NAO has examined lottery money before: in 2017, when it investigated a fall in good causes income under Camelot.

The Numbers the Study Will Inherit

The Commission's official statistics put payments to good causes at about £1.8 billion for 2025 to 2026, broadly level with the more than £1.8 billion that its then chief executive, Andrew Rhodes, cited for the previous year. April to June 2026 brought £377.2 million, 22.2% below a year earlier, which the Press Association reported as the lowest quarter in eight years. Sales fell 12.5%, mainly on EuroMillions and online Instant Win Games, the Commission said, and Allwyn began recovering its implementation costs that quarter through an Implementation Adjustment in the good causes calculation.

Allwyn's account is more positive. It said in March that 2025 sales rose 3.5% to £8.1 billion, with at least £1.7 billion, or £33 million a week, generated for good causes against £30 million a week when it took over. It said it had invested more than £450 million and was on track to reach £60 million a week by 2034. In the three months to June its UK revenue fell 14% to €914 million, approximately £784 million, which it put down to a weaker EuroMillions jackpot cycle and an upgrade that took the website and apps offline for about 24 hours, according to the Press Association.

Allwyn originally promised to lift returns over the licence from £17.9 billion to £38 billion, the Telegraph reported in 2025, before reframing the target as £60 million a week. NEXT.io reported that Sir Hugh Robertson, the former Conservative sports minister who chaired Camelot until Allwyn bought it in 2023, claimed last month that Allwyn won on unrealistic projections. iGaming Times could not locate the original remarks.

Litigation, Delays and an Open Enforcement Case

Camelot's challenge to the award was discontinued, and IGT dropped its appeal in January 2024 after the High Court dismissed its damages claim, according to Gambling Insider. The New Lottery Company (TNLC), backed by Richard Desmond's Northern & Shell, lost in full at the High Court on 17 April 2026, a judgment the Commission said showed it "ran a fair and robust competition". On 30 July the Court of Appeal refused TNLC permission to appeal part of that ruling, with Coulson LJ noting it had suffered no loss in practical terms, the Commission said.

Allwyn has cited that litigation as a reason implementation was delayed, NEXT.io reported. The Commission's 2024 to 2025 annual report says Allwyn did not deliver full functionality by February 2025, as the licence required, and that an enforcement investigation was opened; no outcome has been published. Allwyn said in March 2026 that it had satisfied the Commission that full implementation had been achieved. On 1 October the Commission's acting chief executive, Sarah Gardner, acknowledged "teething issues" with the new online player protections.

The Courts Answered the Legal Question, Not the Value Question

The Commission has spent years, and legal bills the Guardian reported at more than £13 million in a single year, proving it ran a lawful competition. The NAO asks something different: whether a lawful process produced a licence that delivers for good causes. A procurement can be fair and still reward an optimistic bid. The Court of Appeal's view that TNLC suffered no loss is a finding about a rival bidder's claim, not about whether the winning projections were realistic.

The Incentive Model Is the Detail Worth Watching

The licence ties the good causes contribution to the operator's profits, and returns have been flat in its first full year just as implementation costs start to come back out through that formula. That is not evidence of failure: cost recovery is written into the licence, and Allwyn says its investment will fund the new games that grow sales. But good causes are now carrying part of the cost of a transition completed more than a year after its contractual deadline, and how delay, cost recovery and weaker sales interact is the kind of design question the NAO's first two strands cover. Whether new games such as Powerball can lift sales enough to make the model pay is the test for the rest of the licence.

A Watchdog Report With Interim Leaders on Both Sides

Allwyn UK is run by Phil Walker on an interim basis, an appointment two MPs questioned with the regulator in August, and the Commission has an acting chief executive while it recruits. The report will land on whoever holds those jobs in spring 2027, and its question on future licensing reaches the competition for the licence that follows in 2034.

The Commission has won every legal argument about how it awarded the licence. The NAO will look at the measure that matters more to good causes: what the licence is actually raising.