CAT dismisses subsidy challenge involving £70 million investment

On the 26 February 2026, the Competition Appeal Tribunal “CAT” made an important judgment under the Subsidy Control Act 2022 “SCA”, dismissing a challenge brought by The New Lottery Company and others against the Gambling Commission. 

The claimants argued that the Commission unlawfully granted Camelot (the then-operator of the National Lottery) an approximate £70 million marketing investment from the National Lottery Distribution Fund. They claimed this amounted to a subsidy which failed to comply with the SCA and should therefore be overturned.

The CAT disagreed.

This judgement provides valuable insight into how future UK courts will apply the Commercial Market Operator “CMO” principle when assessing whether public financial assistance results in an economic advantage.

The background

Camelot had operated the National Lottery under the Third License “3NL” until the Fourth License came into force on the 1 February. Over multiple years, Camelot submitted annual marketing investments proposals “MIPs” under condition 23 of 3NL, which allowed for certain jointly financed investments designed to increase lottery revenue. 

The argument

In July 2023, the Commission approved Camelot’s 2023/24 MIP, permitting Camelot to retain £70 million of Lottery revenue to fund marketing activity. The claimants argued that:

• This retention of revenue was financial assistance amounting to a subsidy.
• The Commission had misapplied (or ignored) its duties under the SCA.
• The assumptions upholding the investment were flawed.
• The Commission lacked the power to make such a grant at all.

So, was it a subsidy?

The main question was whether the £70 million investment met the definition of a subsidy under section 2(1) of the SCA, and specifically whether it provided economic advantage.

The CAT confirmed that under section 3(2), financial assistance only provides an advantage when on terms more favourable than those available on the market. The tribunal accepted that although the Commission was the only body capable of providing this investment, the proper test was whether a rational private investor in a comparable commercial relationship would have made the same decision.

The CAT found:

• The Applicant’s allegations of “indirect long-term benefits” to Camelot were speculative.
• The econometric modelling criticisms were overstated.
• The Commission acted within a wide margin of commercial judgement.

The result? No subsidy existed, because the decision was consistent with normal market conditions.

What if a subsidy had existed?

Had there been an economic advantage, it would have been granted through public resources, because Camelot retained revenue which would have otherwise joined the National Lottery Distribution Fund.

Even if a subsidy had been found, the CAT was critical of the Applicants’ delay. The Commission did not publish the investment on the subsidy transparency database because it considered that the investment was not a subsidy, it did however publish the decision to make the investment on its own website in August 2023. The Applicants’ said they only became aware of the decision on 15 January 2025, which the Commission accepted, however they then waited two months before contacting the Commission in March 2025 and did not begin proceedings until 8 May 2025.

The Court held that the one-month time limit under the act, whilst not exactly applicable, should apply similarly in the case. Challenges should be issued within one month of awareness, and failure to meet these timescales normally justifies remedies being refused.

Key takeaways from the CAT’s decision:

• Regarding the CMO principle, it is for the applicant to establish that no rational private market operator would have made the decision – and the public authority has wide discretion.
• A delay would have been fatal to remedies anyway.
• The Judgment reinforces the CMO principle as aligned with EU “market economy operator” case law and highlights strict timing expectations under the Subsidy Control Act.

For public authorities in particular, the case emphasises the importance of documenting commercial reasoning and maintaining strong financial analysis when making decisions with economic implications. For those challenging, it highlights the evidential and procedural hurdles produced in subsidy appeals.

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