Public spending watchdog opens investigation into National Lottery

The National Audit Office (NAO), the United Kingdom’s accounting watchdog, has opened an investigation into whether the National Lottery delivers as much to charitable resources as it could under its operator, Allwyn.

Why now? Sales and charitable donations have fallen. Allwyn has also fallen short of the pledges it made during the bidding process.

What the NAO will examine

The NAO will review whether the Gambling Commission and the Department for Culture, Media and Sport (DCMS) oversaw the move to the new operator effectively. It will also assess how they implemented the fourth license. The watchdog’s stated aim is to “maximize returns to good causes and deliver long-term public value.”

The review puts Allwyn, the Gambling Commission, and DCMS under scrutiny. The Gambling Commission awarded the license.

Commitments under scrutiny

Allwyn is owned by Karel Komárek, a Czech billionaire. It won the fourth license in 2022. A central part of its bid was a commitment to raise charitable donations from almost £18bn to £38bn. That equals £3.8bn a year over the coming decade.

The goal was later reduced. Allwyn said it would double donations from £30m to £60m a week. That is almost £3.2bn a year.

What the figures show

The Gambling Commission’s own reporting indicates the Lottery’s contributions to good causes last year were £1.7bn.

Figures published in August point to further decline. Contributions fell by nearly a quarter between April and June, to £377.2m. It was the lowest figure in almost a decade.

Allwyn has said it will hit its pledges. The gap between forecast and reality continues to grow. Some recipients of Lottery funding have reportedly begun to voice dismay over what the drop means for their plans.

The Lottery is the biggest contributor to Britain’s charities. Lottery money pays for projects in sport, the arts, heritage, health, education, and the environment.

What could happen next?

The NAO’s role is to examine whether public money has been spent effectively. That raises a question. Will past and present Allwyn executives, along with Gambling Commission figures, be called before members of Parliament to explain the shortfall? The review makes it a possibility.

Wider pressure on the Lottery

The NAO’s move happened after The Telegraph’s report that Culture Secretary Lisa Nandy is suggesting the Lottery be among the struggling companies targeted for nationalization under Andy Burnham.

Separately, DCMS has launched the first review in more than 20 years of how Lottery ticket money is spent. Nandy said the model was “showing its age.” In a written ministerial statement, she said decisions are too often “top-down, remote and made in distant rooms hundreds of miles away from the communities who know their needs and ambitions best.”

The public consultation began in early July. It was expected to close at the end of September.

What the organizations said

A Gambling Commission spokesman said it welcomes the NAO’s study as part of its routine scrutiny of major public programs. The Commission will support it fully. It added that the NAO decides the scope and findings, so further comment would be inappropriate while the work is underway.

The NAO has not yet said when it will publish its findings. Allwyn has not yet commented.