Rehab has initiated legal action against the State and An Post for damages arising from the National Lottery's dominant market position.
The charity group lodged legal papers with the High Court yesterday, less than a day after An Post and UK operator Camelot were unveiled as the Government's preferred bidder for the State's lottery licence.
Rehab claimed the manner in which the National Lottery is being operated contravened European competition law and represented abusive conduct in the marketplace.
The current gaming legislation imposes a €20,000 prize cap on charitable lottery operators such as Rehab.
This regulatory position means private charity lotteries are prevented from competing on a level playing field with the National Lottery.
Market share
As a result, the State franchise operates an effective monopoly with a 98 per cent market share.
While lawyers for Rehab did not lodge a statement of claim yesterday, it is understood the group intends to pursue the State for damages of up to €1.5 billion.
UK consultants Oxera recently estimated Rehab had suffered back-dated losses of €600 million since the inception of the weekly cap on its prize fund.
Rehab is also understood to be seeking a further €900 million in compensation which it calculates as the likely future losses it would suffer from the sale of the new 20-year licence to operate the National Lottery.
The Attorney General has informed Rehab that its action will be vigorously defended by the State if it goes ahead.
Rehab’s legal action is separate from its High Court challenge to Minister for Justice Alan Shatter’s decision to phase out funding for charity lotteries under the Charitable Lotteries Fund, which has yet to be ruled on.
The case, if it proceeds, is unlikely to be heard by the courts before the new operators take over at the helm next year.
Separately, it emerged yesterday that A&L Goodbody had stepped aside from advising Rehab in its dispute with the Government over the lottery.
The legal firm had also been advising Camelot's parent company, Ontario Teachers' Pension Plan (OTPP), in relation to the sale of the Irish licence.
A&L Goodbody yesterday declined to comment on the matter. An OTPP spokesman also said it did not comment on its “advisor relationships”.
However, Rehab confirmed A&L Goodbody was no longer advising it on any of its legal challenges related to the National Lottery, and that a new legal team had been appointed.
On Thursday, Minister for Public Expenditure and Reform Brendan Howlin announced Premier Lotteries Ireland, a consortium involving An Post and Camelot, was the preferred bidder for the State's lottery licence.
The consortium offered to pay the State €405 million for the licence, the highest of three bidders than entered the competition.
Mr Howlin’s department confirmed yesterday the decision to select Premier Lotteries Ireland was made on Thursday, on the day of the announcement.
Pension arrangements
The department also confirmed that the Labour Relations Commission had prepared proposals in relation to the future of the existing 103 National Lottery staff , which provide that all staff will transfer to the next operator "and will fall under Transfer of Undertakings legislation".
While the legislation does not cover cover pension entitlements, the LRC proposals propose that National Lottery employees who are members of the An Post pension schemes shall be offered pension arrangements which are no less favourable than their current pensions by the new licence holder.
