HomeInsightsGovernment publishes response to consultation on society lottery reform

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The aim of the consultation was to consider options for making changes to the society lotteries framework to enable both the National Lottery and society lotteries to thrive, and consequently to grow overall returns to good causes. In March 2015, the then Culture, Media and Sport Select Committee held an enquiry into society lotteries, and recommended reforms to the sales and prize limits, subject to comprehensive advice from the Gambling Commission.

Large society lotteries are regulated by the Gambling Commission. The current legal limits that society lotteries operate within are, for large society lotteries, a per draw size of £4 million, a maximum prize of £25,000 or 10% of a draw’s proceeds, meaning an effective cap of £400,000, and an annual limit of £10 million. They also have to return a minimum of 20% to the good cause(s) they support, with the remaining 80% split between prizes and expenses.

Small society lotteries operate within defined thresholds of per draw sales not in excess of £20,000, and annual sales not in excess of £250,000, and do not require a Gambling Commission licence, but instead must be registered with local authorities. The legislation specifies they must not be operated for private profit or gain, but only as a means to raise money for good causes.

As a result of the consultation, the Government will be making the following changes to the current limits:

Large society lotteries:

  • increase the individual per draw sales limit from £4 million to £5 million;
  • increase the individual per draw prize limit from £400,000 to £500,000;
  • increase the annual sales limit from £10 million to £50 million, with the ambition to introduce a split tier licence for large society lotteries so long as this will increase returns to good causes across the sector. The Government aims to run a second consultation to gather evidence about the case for an upper tier licence of £100 million, and what additional licensing conditions should be attached;

Small society lotteries:

  • no change to existing per draw and annual sales limits.

The Government says that it is sympathetic to calls from the society lottery sector to raise the annual limit to £100 million. However, it says that this is a significant increase and there is little concrete evidence on the wider impacts of such an uplift. It therefore views the increase to £50 million now as a first step in the process, which will enable it to monitor the impact on the sector and build an evidence base, particularly with regard to the effect on good causes returns. It aims to launch a further consultation on introducing a higher tier licence, to allow for a society to sell up to £100 million annually, should it so choose. This will gather evidence about what additional licensing conditions should be attached to improve clarity for players and boost returns to good causes and the case for a further extension to £100 million.

The Gambling Commission is planning to consult on measures to tighten the licensing framework for society lotteries, looking in particular at the information provided to players on how the proceeds of a lottery are used (including publishing breakdowns of where all money is spent), and the good causes that benefit. The Government says that it will also be looking further to consider how best to increase transparency in relation to executive pay and will seek further advice from the Gambling Commission. It will look to legislate if necessary if these measures do not go far enough. To read the response in full, click here.