Allwyn, the National Lottery group, has reported a drop in sales and earnings in the UK due to a lack of new products and technology delays after taking over the licence earlier this year.
The Czech-based group revealed that UK ticket sales fell 1% year-on-year on a constant currency basis over the third quarter to the end of September, attributing it to a weaker performance in instant win lottery games. Allwyn stated that its performance "continues to reflect limited product and channel developments", with plans for new draw-based games delayed due to legal issues during the handover of the licence.
Allwyn took over the 10-year licence to run the lottery on February 1, replacing Camelot. However, the introduction of new draw-based games has been delayed following setbacks with a switchover to a new technology provider after Allwyn agreed to extend the contract for the existing supplier, International Games Technology (IGT).
IGT had challenged the Gambling Commission’s decision to award Allwyn the 10-year licence in court, but later dropped the legal action. Andria Vidler, Allwyn’s UK boss, said earlier this year that plans for new draw-based games had been delayed until 2025.
It is speculated that the technology switchover may now not happen until the summer, or even early 2026. Allwyn has already admitted that delays to the new games it had hoped to introduce in 2024 will hold back the amount of money it can give to good causes in the early part of its 10-year licence.
Despite falling short of early targets, the group remains committed to its long-term goal of doubling money for good causes. Allwyn stated upon announcing the results: "We remain focused on executing our plans to transform the UK National Lottery, including upgrading legacy systems to support developing the product portfolio and elevating the customer proposition."
The third-quarter results showed that UK underlying earnings plummeted 84% to 7 million euros (£5.8m), with the group attributing the significant decline largely to the introduction of a new incentive and profitability mechanism with the start of the new licence.
It was also revealed that its UK arm spent 54.4 million euros (£45m) in capital expenditure, up from 2.8 million euros (£2.3m) a year earlier as it invested in upgrading its technology and point-of-sale terminals. The wider Allwyn group reported that underlying earnings increased by 12% to 410.8 million euros (£340.2m) in the third quarter, while total revenues rose 7% to 2.14 billion euros (£1.77bn).
However, on a pro rata basis, underlying earnings slipped 1% to 289.2 billion euros (£239.5bn) as the UK performance weighed on the group. Allwyn noted that across its global operations, demand had remained robust despite a pullback in consumer spending.
In a statement, The National Lottery indicated their resilience amidst challenging economic conditions: "While general consumer sentiment remains lower than in the pre-pandemic years, owing to factors including a period of elevated inflation, higher interest rates, and an uncertain economic and geopolitical outlook, our business has seen only a limited impact."
They attributed their stability to "the low price point of our products and low average spend per customer, as well as our large number of regular players", the group elaborated.
Allwyn bought previous National Lottery operator Camelot in February last year in the run-up to taking over the next 10-year licence. It was the first time the lottery had changed hands since it was launched 30 years ago.
An intense legal wrangle ensued between Allwyn and Camelot regarding the Gambling Commission's decision to award the licence to Allwyn. The dispute was settled when Allwyn purchased Camelot, though both entities remained distinct in the lead-up to the handover.