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Billionaire UK media tycoon Richard Desmond’s companies do not have enough liquid assets to pay potential legal costs, it has been claimed in court as part of a £1.3bn lawsuit over the contract to run the National Lottery.
The UK Gambling Commission and Allwyn, which won the contract to run the state-franchised lottery, asked a judge on Wednesday to make an order forcing Desmond’s Northern & Shell to set aside funds to ensure it can cover legal costs should he lose the high-profile case.
“There is good reason to doubt the claimants’ ability to meet an adverse costs order,” Allwyn said in written arguments.
Northern & Shell is suing the commission over claims the licensing process for the 10-year contract was unfair and is seeking damages of up to £1.3bn. The increasingly bitter legal battle, to be heard in October, has dragged in Allwyn, whose ultimate beneficial owner is Czech billionaire Karel Komárek. Allwyn is an interested party in the litigation.
Lawyers acting for Allwyn told the court that Northern & Shell would be on the hook for at least £55mn in legal costs if it lost the case.
Under the English system, the loser in a lawsuit typically pays the other side’s costs.
Allwyn told the court on Wednesday that Desmond’s companies, The New Lottery Company and Northern & Shell, “do not have liquid assets of their own to pay their own costs, let alone those of the defendant or the Allwyn parties”.
It argued this meant the claimants could walk away without paying should they lose the October case, as the court only has jurisdiction over those two companies in Desmond’s empire.
A “security for costs order” — also applied for by the commission — would require Desmond to provide financial security to cover legal expenses if he loses. The instruments are used in instances where there is concern the claimant may not be able to afford the legal bill.
The New Lottery Company does not disclose its cash holdings but made a loss before tax of £127,000 in 2023, while Northern & Shell accounts from 2023 show it had £20.8mn in cash.
Sa’ad Hossain KC, representing Northern & Shell, said it had “sufficient funds”. He claimed it would be “fanciful to suggest” that a company of its stature “would seek to tarnish its commercial reputation to avoid any adverse cost, which would in any event be such an insignificant proportion” of its assets.
Desmond, who built his business with pornographic titles and celebrity magazines including OK!, has previously said that he saw serious flaws with the secretive auction process, which he claimed led to high costs being run up at his bidding company in his attempt to win the National Lottery contract.
The Gambling Commission declined to comment on ongoing legal proceedings.
