The Parliamentary Committee on Culture, Media and Sport report recently published its report on regulation of society lotteries and the National Lottery. This report makes some important recommendations which could have a positive impact on charities.
For instance, the report recommends a change to the return to good causes for start-up lotteries which could reduce the significant barrier for charities and voluntary organisations considering this means of fundraising for the first time. However, the recommendations could also have far reaching consequences for “umbrella lotteries” and large, well-established society lotteries, which may be viewed as less welcome by the charities involved in them.

Commenting on the report, John Whittingdale, Chair of the Committee said “many charities now depend upon society lotteries as a vital source of funds. We want to see the maximum return to good causes and believe that the regulatory regime governing society lotteries should be designed to encourage that.”

The Recommendations

• A non-commercial organisation carrying out society lotteries is required to distribute a minimum of 20% of the proceeds of each lottery draw to good causes. Currently this rule applies no matter the size of the organisation or lottery or its stage of development. The report recommends that for new lotteries this requirement should be spread over an extended period, to help lotteries cope with high start-up costs.

• The report expresses concern about the growth of umbrella lotteries, where a number of linked societies promote lotteries which are marketed under a single brand. Umbrella lotteries are designed so each society works within the statutory limits on proceeds (income) from ticket sales but together the linked societies exceed the statutory limits. The report concludes that existing legislation should be amended to recognise umbrella lotteries as a separate class of lotteries which have their own limits on draw size, annual sales and prizes.

• The report recommends that there should be greater differentiation between the regulations applied to lotteries which are small and local in nature and those applied to larger ones, especially those run by commercial organisations, which tend to return smaller proportions of their funds to the charity.

• It recommends that the 35% cap on operating costs, other than prize money set aside for roll-overs, should be reintroduced for the largest lotteries. A previous cap on operating costs was removed by the Gambling Act 2005, which currently provides that expenses must be “reasonable” but does not give a specify a limit.

Other comments

The report considers whether the growth of society lotteries could harm the National Lottery. Whilst the Committee acknowledges that the potential for competition remains, it notes that the National Lottery’s unique national nature is not under threat from current competition.

The report also comments on the increasingly blurred distinction between society lotteries and betting, caused by the growth of online gambling. The Committee suggests that there is an urgent need for an effective means of reducing consumer confusion.

Implementation

The report’s recommendations need changes to gambling legislation to be implemented and any changes to the law will now have to await the next Parliament. There is little, if any, party political division in this area and so it seems likely that the proposed changes could be implemented by the new government whatever the colour of its politics.


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Sarah Payne

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Posted on 05/05/2015 in Legal Updates

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