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UK Society Lotteries

From Open Government Pioneer Project

Introduction[edit | edit source]

This page is intended to support collaboration in civil society on the key concerns and opportunities to review UK rules that govern Society lotteries.

The UK Parliament's Culture, Media and Sport Select Committee held an inquiry into society lottery reform in 2015.

The Government is now consulting on their proposals for society lottery reform, including sales and price limits and proposing significant lifting of the current caps in place.

Feel free to edit this page.

Analysis[edit | edit source]

The UK DCMS is consulting on the following changes:

  • Increasing the cap on per draw sales from £4m to £5m, and potentially £10m (£5m is the Government's preferred option).
  • Increasing the cap on per draw sales to £10m in the scenario of the Government deciding to cap the maximum prize at £500k.
  • Increasing the cap on maximum prize wins from £400k to £500k, and potentially £1 million.(£500k is the Government's preferred option).
  • Increasing the cap on annual sales from £10m to £100m.(£100m is the Government's preferred option)
  • Increasing the per draw sales threshold for small society lotteries.to £30k or £40k (from £20k)
  • Increasing the annual sales threshold for small society lotteries to £400k or £500k (from £250k).
Easing the caps on sales and price limits
Concerns raised Argument Analysis Suggestions
The annual sales limit
  • The UK Government's preferred option is to increase the society lottery annual sales limit to £100 million.
  • The current society lottery annual sales limit is set at £10 million.
  • This limit has resulted in additional administration costs from charity fundraising by society lotteries, meaning that some funds which could otherwise go to good causes are used to pay these costs.
  • This limit also interacts with player numbers that some society lotteries are able to have fewer draws each year with the result that the funds they generate for good causes is decreasing.
  • This limit also means that society lotteries which are at or near the limit cannot raise more funds for good causes from their society lottery. This cap on charity fundraising, at a time when other income streams are under pressure, is unhelpful and ultimately results in charitable causes being unable to fund work that they could otherwise undertake.
  • That SCVO support the society lottery annual sales limit being increased to £100 million.
Competition with National Lottery
  • Charity fundraising by society lotteries complements charity fundraising by the National Lottery.
  • National lottery funding agents have expressed concerns about the impact of changes to thresholds for society lotteries on the potential income to good causes via the National lottery. Two key factors that are important for third sector, is that the overall funding for sector good causes increases, and that the 'no strings attached' independent grant nature of this source of funding is secure.
  • The win-win for the country and for the charity sector is for funds to good causes from the National Lottery to grow alongside funds to good causes from society lotteries. Gambling Commission official statistics show that this is what has happened during the last decade.
  • The society lottery limits exist as part of numerous differences between the regulation and operation of Society Lotteries and the National Lottery.
  • These differences will still remain even if the Government decides to go with the upper changes listed in the consultation.
  • The society lottery sector are supportive of the National Lottery and the need for these differences to remain, which is why it is not asking for the limits to be removed.
  • National Lottery funds to good causes reduced in 2016-17. Analysis from numerous stakeholders has found that this was due to operational reasons in the running of the National Lottery. For example, the April 2018 House of Commons Public Accounts Committee report on the future of the National Lottery gave several reasons for this, none of which relate to society lotteries. These were: a) more players buying scratch cards which have a lower return to good causes; b) lower player awareness of the link between playing the lottery and supporting good causes; c) game changes in the Lotto game.
  • In particular the Committee state: "We asked Camelot whether these contradictory game changes had contributed to people spending less on the Lotto game. Camelot accepted that, after a short-term boost to sales, these game changes had contributed heavily to a disappointing year in 2016-17."
  • In it's advice to Government, the Gambling Commission, the regulator of both the National Lottery and society lotteries, makes the point several times that their economic modelling of the factors influencing National Lottery income finds that society lotteries are not a significant factor. For example, on page 3 of it's 'Review of Society Lottery advice' document, provided to Government in October 2017 and published on 29 June 2018, it says "there was no statistically significant effect of society lotteries affecting National Lottery sales".
  • Numerous other reports have considered this issue and found that society lotteries do not impact negatively on the National Lottery. These include: the April 2012 report 'Assessment of Lottery Market Issues' (Commissioned by the UK Government; the May 2013 report 'A Chance to Give'; the February 2014 report 'How society lotteries could do even more for good causes'; the March 2015 House of Commons report 'Society Lotteries', and the 2017 National Audit Office report 'National Lottery funding for good causes'.
  • The April 2012 report 'Assessment of Lottery Market issues' (Commissioned by the UK Government) notes that advertising of different lotteries can have the effect of boosting the whole market due to what it refers to as "marketing spillover".
  • That the weight of evidence highlights that society lotteries and the National Lottery complement each other in raising funds to good causes, and that the analysis by the Gambling Commission in particular, in addition to other evidence, provides confidence in this area.
  • That SCVO reference the Gambling Commission evidence on this area in their consultation response.
Risks of gambling and mental health
  • It is important that any changes to society lottery legislation do not impact on vulnerable people.
  • The link between gambling addiction and mental health has been a growing concern for charities across the UK. This has implications for any changes to lottery policy.
  • Society Lotteries are strictly regulated by the Gambling Commission, including relating to potential risks of gambling to vulnerable people..
  • The Gambling Act 2005, the legislation which sets out the law under which society lotteries operate, has three licencing objectives. These are:

(a) preventing gambling from being a source of crime or disorder, being associated with crime or disorder or being used to support crime,

(b) ensuring that gambling is conducted in a fair and open way,

(c) protecting children and other vulnerable persons from being harmed or exploited by gambling.

  • The Gambling Commission, in their advice to the UK Government on society lotteries, published on 29 June, states that: “The Commission remains of the view that removing the limits placed on the proceeds and prizes of large society lotteries poses no regulatory risks to the objectives of the Gambling Act 2005.”
  • The advice also notes that “In general society lotteries are considered to be low risk in terms of the licensing objectives set out in the Act.”
  • The advice is available here  http://www.gamblingcommission.gov.uk/PDF/consultations/Society-lottery-advice-provided-to-DCMS-002.pdf
  • The NatCen Social Research report 'Gambling behaviour in Great Britain in 2015' published in August 2017, finds that lotteries have the lowest prevalence of problem gambling of any gambling activity.
  • Society Lotteries must make a contribution to GambleAware and do so either directly or via The Lotteries Council.
  • That the consultation isn't about whether or not gambling or society lotteries are a good thing, but is about changing the fundraising limits placed upon them.
  • Society Lotteries are already regulated tightly by the Gambling Commission, including in relation to potential risks of gambling on vulnerable people.
  • The evidence provided by The Gambling Commission provides confidence that the proposed changes will not impact on the objectives of the Gambling Act - which include protecting vulnerable people.
  • That SCVO reference the Gambling Commission evidence on this matter in their consultation response.
Raising the society lottery draw limit and decoupling maximum prize from the per-draw sales limit
  • The UK Government propose increasing the per draw sales limit to £5 million, but also give the option of increasing it to £10 million.
  • The UK Government ask a consultation question about decoupling the per draw limit from the maximum prize.
  • Numerous stakeholders, including The Lotteries Council, The Institute of Fundraising, The Hospice Lotteries Association, People's Postcode Lottery and many charities support the per draw sales limit being raised to £10 million.
  • The limit was set at £2m in 2005 and then doubled to £4m in 2009.
  • There is concern that without a significant rise in the limit additional administration costs will accrue, using funds which could otherwise go to good causes.
  • There is also a concern that a small rise in the current limit would not future-proof the legislation, given it is likely to be a decade before these limits are updated again.
  • The situation is complicated because under the Gambling Act, the maximum prize from a society lottery is 10% of the value of the tickets in a draw. This means that increasing the draw limit to help avoid administration costs could also have the impact of increasing the maximum prize from society lotteries.
  • If the per draw sales limit was raised to £10 million AND £10 million of tickets were sold, the maximum prize a society lottery could provide would be £1 million. There is some consideration around whether this would take society lotteries into the territory of the National Lottery.
  • In the consultation the Government considers decoupling the draw limit from the maximum prize. It asks: "Do you think that if the maximum prize is capped at Government's preferred option of £500,000, the per draw sales limit should be increased to £10 million, as an exception to the general prize limit of 10% of sales."
  • Answering yes to this question, therefore supports an increased draw limit, even in a scenario where the prize is capped. (Note that in this question it doesn't ask for views on capping the prize, but only if you back a £10m draw limit in that scenario).
  • The Lotteries Council are of the view that maximum prize should be increased to £1 million, regardless of sales, and point out that this is still much smaller than the maximum prize from either the Lotto draw or the Euromillions. By way of comparison, in the first six months of 2018, the average Lotto jackpot was £8.73m and the highest Lotto jackpot was £21m. The average Euromillions jackpot was £51.2m and the highest Euromillions jackpot was £155.5m.
  • That SCVO support raising the draw limit to £10 million, including in the scenario where the Government cap the maximum prize at £500,000.
Easing Small society lotteries limits
  • The consultation asks for views on increasing the thresholds on small society lotteries.
  • Small society lottery limits are set at a lower level than larger society lottery, as a trade off for reduced regulation and bureaucracy for scrutiny. This makes it easier for smaller society lotteries to be viable, while keeping the enhanced scrutiny on larger society lottery operators.
  • The Lotteries Council and the Hospice Lotteries Association back increasing the small society lottery per draw sales limit to £40k and the annual sales limit to £500k, in order to support smaller charities which run lotteries (eg hospices and air ambulances etc) and help them reduce administration costs.
  • That SCVO support raising the small society lottery limits to £40k per draw and £500k per year.
Timescales for implementation of changes
  • There is concern that slow implementation of proposed changes will result in additional administration cost accruing for some society lotteries.
  • The whole process of considering the society lottery limits has taken many years.
  • The UK Government first announced it would consider this issue in 2012, and then there was a select committee enquiry and a UK Government Call for Evidence in 2014-2015.
  • The Select Committee enquiry was published in March 2015 and included a recommendation to raise the society lottery limits.
  • Over this time the administrative challenges of the current limits have increased.
  • Numerous society lotteries are in the position that unless the Government implements it's proposed changes by early 2019, that further significant administrative challenges and costs will be incurred.
  • That in it's consultation response SCVO encourage the UK Government to implement proposed changes by January 2019.
The maximum prize from society lotteries
  • The consultation asks for views on the maximum prize available playing society lotteries.
  • The consultation asks for views on the maximum prize and the Government's preferred option is £500,000, although it provides a option for a £1m prize..
  • The Lotteries Council favour a £1m prize, regardless of sales, as they feel that this is still significantly lower than that provided by the National Lottery.
  • The Lotteries Council also note that although society lottery sales are often driven by support for charities, prizes can also boost sales, and thus help increase funds to good causes.
  • That SCVO back either a £500,000 or a £1m maximum prize.