Eden Leisure loses bid to stop lotteries concession to €105 million bidder

The Eden Leisure Group has lost a bid for a prohibitory injunction against the award of the national lottery concesssion to National Lottery PLC. 

The warrant of prohibitory injunction was filed by Eden Leisure Group and Italian company Sisal Lottery Italia  and Austrian firm Scientific Games International. 

IZI Group and National Lottery plc were selected to take over the Lotto, National Lottery, Super 5 and other lotteries from Maltco Lotteries after submitting a winning bid of €105 million for a 10-year concession. Maltco, which had operated the lotteries in Malta since 2004, did not submit a bid. 

Unsuccessful bidders Eden Leisure, Sisal and Scientific Games subsequently filed a request for a prohibitory injunction against the economy and finance ministries, the Privatisation Unit and the Malta Gaming Authority, to stop them from contracting National Lottery plc as the preferred proponent for the lotteries. 

National Lottery plc’s lawyer, Aaron Galea Cavallazzi, argued that the applicants lacked a prima facie right to bring the action, saying the prejudice they would suffer is easily fixed by an action for damages. On the other hand, the government could suffer harm to its infrastructure modernisation drive, not to mention the potential loss of millions of euros in tax income and the loss of 265 jobs. 

A request for a prohibitory injunction must prove there is an intention to carry out an undesired act and that the applicant would potentially suffer a disproportionate prejudice if it is allowed to happen. 

Galea Cavallazzi said the effect of a warrant protecting Eden Leisure’s prima facie right would be disproportionately large in the light of the potential prejudice to applicants, who could simply sue for damages. 

The warrant was also filed at too late a stage in the tendering process, the defendants argued pointing out that the law now bound them to finalise the concession contract. “It is useless for the applicants to attempt to turn back the clock, as this cannot be done through a warrant of prohibitory injunction and that is why the request for the injunction is not only frivolous and vexatious, but also irregular and abusive as it is attempting to stop the defendants… from carrying out their legal and contractual obligations.” 

The decision to award the contract was communicated by the Privatisation Unit on 15 November, when both Eden Leisure and National Lottery plc were formally notified with the final decision. 

The court revoked the decision to provisionally uphold the request, with National Lottery plc reserving their right to file a case for damages against the plaintiffs. 

Malta’s national lotteries were privatised in 2004 to Maltco for the price of €18 million. The previous year, the lottery generated €48.5 million in sales for the Lotto Department. Sales increased to €52 million in 2004, and doubled to €82.5 million by the end of the first eight-year concession. In 2012, Maltco won the second 10-year concession for €39.1 million 

According to IZI Group’s Johann Schembri, the value of Maltco’s investment by the end of 2022 would have been conservatively €57.9 million, apart from another €12.2 million in gaming tax savings, and another €13 million in annual earnings before tax. “In this context, one understands the winning concessionaire’s analysis and business plan was far more anomalous, but reflected the real value of the concession by way of a fair payment to the government of Malta, while allowing a reasonable income for the company,” Schembri told the court.