Camelot fined over historic control and governance failings

Camelot has today (Thursday) apologised after the Gambling Commission imposed a fine of £1.15m (€1.28m/$1.48m) on the operator of the UK National Lottery for historic control and governance failings dating back to 2016.

The ruling completes an investigation that the Commission initially launched on December 7, 2016, only to then put the probe on hold as Camelot instigated an effort to implement solutions.

The Commission today said it identified five controls-related matters that it deemed were “sufficiently serious” that payment of a financial penalty would be appropriate. The first of these involved players utilising version 4.3 of the National Lottery mobile apps potentially being presented with an incorrect ‘nonwinning’ message when checking a winning ticket using the manual results checker or QR ticket scanner functionality within the app.

Secondly, between 10:32pm on August 27, 2016 and 9:20am on August 30, 2016 a temporary results page on the National Lottery website displayed an incomplete list of raffle prizes following the Lotto Medal Event draw on August 27.

Thirdly, a total of 2,719 direct debit instructions were not processed correctly on May 23, 2016. As a result, no funds were taken and no wagers were entered in draws. The fourth and fifth controls-related matters related to security measure and Post Office control failings, respectively.

The Commission said it has also sought additional safeguards in respect of key licensee subcontract (KLS) management. However, it added that a further 10 licence breaches did not require further action after considering Camelot’s “positive response” to the incidents.

In agreeing the settlement, the Commission said it acknowledged that Camelot engaged positively with the regulator to address its concerns. The Commission added that it gave credit to Camelot for the early acceptance of failings, and the work it has undertaken to update and enhance its procedures and controls to mitigate the risk of future issues.

The penalty package imposed by the Commission includes a payment in lieu of a financial penalty in the sum of £1.15m which would otherwise be imposed for breach of licence conditions in accordance with the National Lottery Enforcement Policy. The penalty package will be paid for the benefit of good causes.

A Camelot spokesperson said: “We accept the outcome of the Gambling Commission’s investigation in respect of a number of incidents dating back to 2016. As part of the regulatory settlement, we have accepted the historical licence breaches identified, provided voluntary undertakings and will make a payment to National Lottery Good Causes in lieu of a financial penalty.

“While we have always sought to run The National Lottery to the highest possible standards, we accept that, at the time of these incidents, our standards in certain areas weren’t as rigorous as they should have been and for that we’re sorry. We’ve since proactively carried out an extensive programme of work to strengthen our controls, processes and governance arrangements to ensure they are all fit for purpose – and welcome the Commission’s recognition of the work we’ve carried out to mitigate the risk of future issues.”

Having launched the probe and assessed the extent of the failings on December 21, 2016, the Commission directed Camelot to focus its efforts and resources on implementing solutions to address its concerns.

Camelot’s response in December 2016 was a programme of activity it called ‘Operational Excellence Programme’ (OEP). In addition, in February 2017 the Commission directed that Camelot conduct a Board Effectiveness Review (BER) using its powers under the National Lottery Licence. At this stage, the Commission decided to put formal investigation on hold, whilst these measures were in progress.

In November 2017, once Camelot had made sufficient progress on the OEP and BER, the Commission progressed the investigation. This included looking into other controls related failures that had emerged subsequent to the start of the investigation and ultimately led to today’s ruling.

Richard Watson (pictured), Gambling Commission executive director, said: “Camelot has taken a number of steps to rectify the issues and given us assurances that they now have the right processes in place to prevent reoccurrences. It is crucial that the National Lottery is run fairly, safely and with integrity and we’ll continue to hold Camelot to account.”

In March, Camelot urged UK National Lottery customers to reset passwords for their online accounts after the service was hit by a suspected hack. In June, the company appointed Sir Hugh Robertson as its new chairman and also named Robert Walker as deputy chairman and senior independent director.