Outgoing National Lottery operator Camelot has dropped a legal challenge which was preventing the handover of the lottery licence to rival Allwyn.

Allwyn has ended its counter-claim against Camelot for damages due to delaying the £6.4bn contract. But Camelot, which started running the lottery in 1994, is still taking legal action against the Gambling Commission for giving the licence to Allwyn.

The Gambling Commission has said it had run a “fair and robust” competition.

After losing out on the next licence which starts in February 2024, Camelot launched a legal challenge in April, claiming that the Gambling Commission had got the decision “badly wrong”.