National Lottery group Allwyn has posted lower sales and earnings in the UK as it continues to be held back by a lack of new products amid technology delays after taking over the licence earlier this year.
The Czech-based group said UK ticket sales fell 1% year-on-year on a constant currency basis over the third quarter to the end of September, putting it down to a weaker performance in instant win lottery games.
The group said its performance “continues to reflect limited product and channel developments”, with plans for new draw-based games delayed after the handover of the licence was hampered by legal wrangling.
It took on the 10-year licence to run the lottery on February 1, replacing Camelot.
But the setback for new draw-based games follows delays to 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.
Allwyn’s UK boss Andria Vidler told the PA news agency earlier this year that plans for new draw-based games had been delayed until 2025.
It is thought 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.
But the group remained committed to its long-term goal to double money for good causes, despite falling short of early targets.
Allwyn said on 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.”
Third-quarter results for the group showed that UK underlying earnings slumped 84% to 7 million euros (£5.8 million), with the group blaming the “significant” decline largely on the “introduction of a new incentive and profitability mechanism with the start of the new licence”.
It also revealed that its UK arm spent 54.4 million euros (£45 million) in capital expenditure, up from 2.8 million euros (£2.3 million) a year earlier as it invested in upgrading its technology and point-of-sale terminals.
The wider Allwyn group said underlying earnings lifted 12% to 410.8 million euros (£340.2 million) in the third quarter, while total revenues rose 7% to 2.14 billion euros (£1.77 billion).
But on a pro rata basis, underlying earnings slipped 1% to 289.2 billion euros (£239.5 billion) as the UK performance weighed on the group.
Allwyn said that across its global operations, demand had remained robust despite a pullback in consumer spending.
It said: “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.”
This was thanks to “the low price point of our products and low average spend per customer, as well as our large number of regular players”, according to the group.
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.
There was also an intense legal battle with Camelot over the Gambling Commission’s decision to award the licence to Allwyn, which was finally settled when Allwyn bought Camelot, although the two companies continued to operate separately ahead of the handover.