Competition Appeal Tribunal clarifies scope of the Commercial Market Operator principle

The Competition Appeal Tribunal (CAT) has recently delivered a significant judgment in The New Lottery Company Ltd and Others v The Gambling Commission [2026] CAT 14.

On 26 February 2026, the CAT dismissed a challenge brought by The New Lottery Company Ltd and others against the Gambling Commission's approval of an approximate £70 million marketing investment for Camelot (the previous operator of the National Lottery). This is an important decision for both applicants and public authorities on the future application of the Commercial Market Operator (CMO) principle under the Subsidy Control Act 2022 (SCA).

Background

The background to this appeal relates to the operation of licences for the National Lottery. Camelot UK Lotteries Limited (Camelot) originally held the Third Licence.

Under the Third Licence, Camelot submitted a proposal to the Gambling Commission (as permitted under its terms) to retain a portion of the revenue to fund a marketing campaign for the National Lottery. This revenue would otherwise be paid into the National Lottery Distribution Fund. The Gambling Commission obtained independent economic advice on the proposal. Following receipt of that advice, the Gambling Commission approved the marketing investment on the basis that it was projected to generate a net increase in returns.

The central issue in this matter was whether the marketing investment met the criteria set out in section 2 of the SCA: primarily whether it met the definition of a subsidy and whether it provided Camelot with an economic advantage.

Judgment

The Applicants argued that the investment constituted an unlawful subsidy. The CAT disagreed. It confirmed that there was no subsidy and that the Gambling Commission had complied with the CMO principle and its actions were consistent with those of a rational private operator.

Of note is the CAT’s decision that the application of the CMO principle is not confined to circumstances where there is a direct market comparator. The CAT ruled instead that the CMO principle applies where the transaction is capable of comparison and analogous to another commercial context.

Further, the CAT held that the Gambling Commission had obtained independent expert economic and marketing advice and upon acting on their advice, had reduced the investment. As a result, in the CAT’s view, the decision made by the Gambling Commission fell within the scope of rational reactions to commercial circumstances.

In addition, the CAT noted that the Applicants had not acted sufficiently promptly in issuing proceedings and had they been entitled to relief, the CAT would have been inclined to refuse it.

The application was accordingly dismissed.

Implications

This judgment has significant implications for applicants and public authorities.

It makes clear that applicants have the burden of establishing that no rational market operator would have made the same decision. From a procedural point of view, it highlights the importance of acting promptly in issuing proceedings.

For public authorities, the decision further clarifies the operation of the CMO principle, signalling that public authorities have wide discretion in its application provided this is appropriately evidenced. The decision notes the persuasive (though not binding) nature of EU law in relation to the Market Economy Investor Principle, and draws on this in its reasoning. In complying with the CMO principle, authorities should diligently prepare their CMO analysis and document any decision-making and economic evaluations. They should also utilise appropriate expert advice and input to inform any commercial decisions. In demonstrating compliance with CMO, a rigorous, expert-informed and carefully considered analysis is advised, as reinforced in the judgment.

A copy of the judgment is available on the CAT website: Judgment | Competition Appeal Tribunal

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at April 2026. Specific advice should be sought for specific cases. For more information see our terms & conditions.

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