National Lottery's Camelot fined £3m for paying out alleged fraudulent prize claim

News by Rene Millman

Gambling Commission found that UK lottery operator Camelot breached terms of service over database control which resulted in a prize payout on a fraudulent ticket.

The Gambling Commission in the UK has levied a fine of £3 million on Camelot, which runs the UK National Lottery, following an investigation into allegations of a fraudulent prize claim and payout. 

The investigation related to an allegation that a fraudulent National Lottery prize claim had been made and paid out in 2009, but which only came to light last year and was then immediately brought to the attention of the Commission and the Police. 

According to reports by the Telegraph, a  51-year-old man, from Kings Langley, Hertfordshire, had allegedly claimed the £2.5 million jackpot using a damaged ticket. The man was arrested last October and later released without charge.

Hertfordshire Police said the incident was investigated by Hertfordshire Constabulary's specialist Cyber and Financial Investigation Unit working with the Gambling Commission.

Camelot has paid a fine of £3 million. This includes £2.5 million to represent the amount that would have been received by good causes had the prize claim not been paid. 

The Commission found that Camelot had breached the terms of its operating licence in three key aspects: its controls relating to databases and other information sources; the way it investigated a prize claim; and its processes around the decision to pay a prize. 

The investigation found that it could not be certain a fraud had taken place, but it was more likely than not that a fraudulent prize claim had been made and paid out.

According to a statement released by the Commission, the incident was a one-off and the investigation did not uncover systemic failings of the kind that would call into question other prize payouts. It added that when the problem was discovered, Camelot immediately took action to ensure a similar issue could not occur and commissioned external assurance of its controls and processes around prize payouts. Key changes to strengthen these processes have now been implemented. 

Commission CEO Sarah Harrison said, “The Gambling Commission's chief concern is to ensure the National Lottery is run with integrity and that player interests are protected. Camelot's failures in this case are serious and the penalty package reflects this. Importantly, the package also ensures that good causes will not lose out as a result of Camelot's licence breach. 

“Lottery players can feel reassured that our investigations have found no evidence of similar events happening and that controls are in place today to mitigate against future prize payout failings of this type,” she said.

Camelot CEO Andy Duncan said: “It's really important that people understand that this allegation relates to a unique, one off incident dating back to 2009 and involves a potentially fraudulent claim on a deliberately damaged ticket. It has nothing to do with The National Lottery draws themselves. 

“We accept that, at the time, there were some weaknesses in some of the specific controls relevant to this incident and we're very sorry for that. 

“We've strengthened our processes significantly since 2009 and are completely confident that an incident of this nature could not happen today. We welcome the Gambling Commission's confirmation that this is the case.” 

Last month, Camelot said that 26,500 online Lottery accounts had been breached, possibly due to password reuse.

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