R (on the application of Camelot Uk Lotteries Ltd) (Claimant) v Gambling Commission (Defendant) & Health Lottery Elm Ltd & 51 Ors (Interested Parties) & People's Health TRUST (Intervener)

Facts

(1) The relevant facts about the Health Lottery were available and known to C in February 2011. Whilst judicial review proceedings should not be instituted precipitately, there was considerable undue delay on the part of C in bringing the proceedings. C's contentions as to the effect of s.98 and s.19 went to the legality of the Health Lottery and could and should have been asserted to the commission shortly after the announcement and, if the commission did not accept that the scheme was unlawful, should immediately have been the subject of legal proceedings (see paras 63-64 of judgment). (2) The commission had correctly construed s.98 and s.19. Section 19 focussed on the non-commercial society and not on those who were contracted by it to provide services of any kind. Accordingly, it could pay its officers and employees, and their private gain was not a private gain for the purposes of s.19(1). It was clear that the Act did not require an external lottery manager to be non-profit making and it followed that the fact that such manager would make profits that would involve private gain on the part of its shareholders, officers or staff did not of itself result in an infringement of s.19(1) on the part of a non-commercial society that contracted with it. Parliament had enacted a control on the profits of an external lottery manager under s.254. If a non-commercial society paid an external manager an excessive sum in respect of the manager's services it would contravene s.260. Even if the Health Lottery scheme was initially proposed with a view in part for private gain on the part of T, provided the charges for its services were reasonable, the CICs were not ineligible for the grant of operating lottery licences. Equally, the fact that T might profit was not a bar to the CICs retaining their licences (paras 68, 70-71). (3) Whilst the CICs were under common control, they were separate legal entities. The fact they had common directors did not of itself justify their being treated as if they were a single corporate entity. Unless the sales of lottery tickets in any week exceeded the sum specified by T and the CICs, each week's lottery was a separate lottery and if each week's lottery was that of a different CIC there was no legal basis for aggregating the proceeds of each of them. The fact that all of the CICs employed T did not of itself allow their separate proceeds to be amalgamated for the purpose of ascertaining whether there had been a breach of the £10 million limitation in annual proceeds imposed by s.99(3) (paras 72-74).

Application refused.

Held

The claimant (C) applied for permission to apply for judicial review of a decision of the gambling commission refusing to review the grant of a licence to the first interested party (T) to act as an external lottery manager and to the remaining interested parties, which were community interest companies, (CICs) to conduct lotteries.

In February 2011 T announced the launch of the Health Lottery stating that it would incorporate CICs. Each week at least one CIC would promote the scheme with additional CICs joining as more tickets were sold in order to prevent any CIC from exceeding the £4 million threshold for a single lottery under the Gambling Act 2005 s.99. The CICs outsourced the management and day-to-day conduct of their lotteries to T for agreed fees. Each CIC also agreed to donate 20.34 per cent of the lottery proceeds to a registered health charity. The Health Lottery was formally launched seven months later. C asked the commission to consider the legality of the Health Lottery and contended that the purpose for which the CICs had been established was to generate profits for T and that none of the CICs were operated for a non-commercial purpose within the meaning of s.19. C alleged that the Health Lottery was one single lottery and in breach of the Act. The commission stated that the lottery schemes were legal and complied with the Act and refused a review. C issued proceedings in 2012.

The commission contended that permission to apply for judicial review should be refused as C had not filed its claim promptly and had not advanced any compelling grounds for its delay.

Comment

There had been undue delay by the claimant company, which ran the National Lottery, in applying for judicial review of the Gambling Commission's refusal to review the grant of licences to an external lottery manager and to community interest companies to conduct a Health Lottery. When granting the licences, the commission had correctly construed the Gambling Act 2005 s.98 and s.19.