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Media tycoon Richard Desmond drew Rothschild into a court fight on Monday over the UK’s National Lottery, alleging the country’s gambling regulator failed to investigate a potential conflict of interest involving the investment bank.
Desmond’s Northern & Shell asked the High Court in London to require NM Rothschild to hand over documents as part of a lawsuit it has launched against the Gambling Commission.
Allwyn, an international lottery operator, was in 2022 awarded the prestigious contract to run the state-franchised lottery from February 2024.
Northern & Shell, which unsuccessfully bid for the contract, claims the process was unfair. Rothschild had advised the commission on the procurement process but Northern & Shell claims the bank also had a relationship with Allwyn, giving rise to a potential conflict of interest.
Rothschild is not a party in the dispute but Northern & Shell, of which Desmond is chair and, according to Companies House, over which he has significant influence and control, has made the bank’s role part of its case against the commission.
Daniel Toledano KC, representing Northern & Shell, said in written arguments for a hearing on Monday that the Gambling Commission “did not adequately investigate a conflict of interest, or apparent
conflict of interest, in respect of its use of Rothschild”.
Rothschild had access to sensitive information during the UK lottery procurement process, including “all sections of every applicant’s application”, the barrister said.
However, he claimed that Rothschild had been paid a discretionary fee by Allwyn for advising on an investment in the Greek lottery operator OPAP in November 2019.
Toledano added that in 2021 a fund managed by Rothschild invested in a bond issued by Sazka Group, the previous name for Allwyn.
Northern & Shell wants Rothschild to disclose documents, including internal correspondence and details of the bond investment. The company is also calling for the release of various documents from Allwyn.
Valentina Sloane KC, representing Rothschild, told the hearing that Northern & Shell’s disclosure application was “exceptional and intrusive”. The “wide-ranging” documents Northern & Shell was seeking were “not of relevance to the claimants’ pleaded case”, she said.
Rothschild was “unequivocally” not a party to the proceedings, which were “a matter between the claimant and the Gambling Commission”, she added.
Mark Howard KC, representing Allwyn, called on the court to refuse the disclosure application.
He said in written arguments that there was a “strong (and obvious) air of unreality” to Northern & Shell’s claims challenging the procurement process. He described its demand for documents as a “fishing expedition”.
The Gambling Commission said: “We do not comment on ongoing legal proceedings.”
Additional reporting by Ortenca Aliaj
