House of Commons - Explanatory Note
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Clauses 232 & 233: No and limited prizes

517.     Making a gaming machine available for use will be an offence under Part 10, unless the required licences or permit is held for the machine. However, in a number of circumstances no offence will be committed where someone makes a gaming machine available for use. These are:

  • Where a person using a machine has no opportunity to win a prize, whether or not he pays for use of the machine. If a prize is available, a machine is a gaming machine, even if there is no payment required to use it;

  • Where a person, whether they pay for the machine or not, has the opportunity to win:

    ?????????     Only another opportunity to play the machine (see also the definition of "prize" in this Part); or

    ?????????     A prize whose value does not exceed any payment made for use of the machine.

518.     The clauses define payment for use broadly, and this includes payments which entitle someone to use a machine e.g. entrance charges to premises where machines are located. Part 18 contains powers for the Secretary of State to make rules about how to determine the value of a prize.

Clause 234: Single-machine supply and maintenance permits

519.     This clause sets out an exception to the general rule that a person who supplies, etc., a gaming machine must hold a gaming machine technical operating licence. It allows the Commission to issue a permit in relation to a specific gaming machine that authorises its supply, repair, installation, or maintenance without an operating licence.

520.     The Commission can only grant a single-machine permit if it believes that the supply etc., of the machine will not have any impact on the licensing objectives. This permit procedure replicates the permits issued by the Gaming Board under section 27 of the Gaming Act 1968, to individuals outside the gambling business who have single machines which they wish to dispose of, or repair.


521.     This Part of the Bill makes provision with respect to lotteries, and should be read in conjunction with Schedules 2 and 9. The provisions here are built upon the foundation of the Lotteries and Amusements Act 1976, which is repealed by the Bill.

522.     The core definition of a lottery is set out in Part 1 of the Bill, as are clauses dealing with the overlap between betting, gaming and a lottery. Part 18 contains a clause defining the overlap between a prize competition and gambling.

523.     The promotion of a lottery is unlawful under the Bill unless the lottery is of a type that is specifically authorised. There are two main types of authorisation for promotion or management of a lottery under the Bill: authorisation for licensed lotteries and authorisation for exempt lotteries. Licensed lotteries are those that are operated in accordance with a lottery operating licence issued by the Commission under Part 5; exempt lotteries are those which are exempt from any explicit authorisation from the Commission, but which must comply with various conditions. Some exempt lotteries also need to be registered with a licensing authority. There are four types of exempt lottery set out in Schedule 9.

Clause 236: Promoting a lottery

524.     This clause clarifies what is meant by the promotion of a lottery. Subsection (2) sets out the activities which constitute promoting a lottery. This clause has the effect of defining the scope of the offence under the Bill concerned with the unlawful promotion of a lottery. Where an external lottery manager is retained to carry out the arrangements for a lottery on behalf of a society or local authority, a lottery is regarded as being promoted by both the lottery manager and the society or local authority itself.

525.     A person promotes a lottery if (amongst other things) he arranges for the printing, distribution or publication of promotional material. Subsection (3) defines "promotional material" as a document that advertises, invites participation in, contains information about how to participate in, or lists winners in, a particular lottery.

Clause 237: Lottery ticket

526.     This clause provides that lottery ticket includes any document or article which confers or proves membership of the class eligible for prizes. The terms sale, supply and purchase are defined here in relation to lottery tickets.

Clauses 238 to 240: Key terms

527.     These clauses define certain key terms in relation to lotteries. The terms "proceeds" and "profits" of a lottery are defined. "Proceeds" is the total amount paid for the tickets in the lottery, before any deductions. "Profits" refers to that amount, less deductions for prizes, sums "rolled over" to another lottery, and reasonable organisational expenses.

528.     The clauses explain what is meant by the term "draw" in relation to a lottery. The term is defined widely, to include any process by which a prize is allocated.

529.     A definition of "rollover" in relation to a lottery is also provided. A rollover occurs when a prize that has not been allocated in one lottery, is added to prizes available for allocation in a subsequent lottery. A lottery may have more than one draw, but multiple draws will only be part of the same lottery where the class of persons eligible for prizes remains the same. Where prizes from previous draws are made available in the next draw of the same lottery, this will not be a rollover. However, a new lottery will begin if the class of persons eligible for prizes changes.

Clause 241: External lottery manager

530.     The term "external lottery manager" is defined here as a person independent of the society or local authority for whom the lottery is run, who makes the arrangements for the lottery on behalf of the society or local authority.

Clause 242: Promotion of lottery

531.     This clause makes it an offence to promote a lottery. This prohibition does not apply if the person concerned holds and complies with an appropriate operating licence; or the person acts (except as an external lottery manager) on behalf of someone who holds such a licence, and the activity in question is carried on in compliance with that licence. Operating licences can be issued to local authorities, larger non-commercial societies lotteries, or to an external lottery manager acting on their behalf (see Part 5 for details of these procedures).

532.     There is also an exemption from this offence if the lottery falls into one of the exempt categories set out in Schedule 9. These are:

  • incidental non-commercial lotteries;

  • private lotteries;

  • customer lotteries; and

  • small society lotteries (i.e. society lotteries which do not generate sufficient proceeds to require an operating licence from the Commission, and are instead required to be registered with the local authority).

533.     It will be a defence for the person to show that he reasonably believed that he was not committing the offence because:

  • the relevant exemption or licence was held and complied with as required;

  • the arrangement was part of the National Lottery; or

  • the arrangement did not fall within the definition of "lottery" under Part 1.

Clause 243: Facilitating a lottery

534.     This clause makes it an offence to facilitate a lottery, which means, in this context, advertising a particular lottery, or printing tickets or promotional material for it. Since it is provided that these actions must be with respect to a "particular lottery", this offence is not intended to capture those who, for example, print generic tickets that can be used in lotteries generally.

535.     The offence will not apply if the lottery is exempt, or if a person acts in accordance with the terms and conditions of an operating licence. A person does not need to be a licence holder themselves to benefit from this exemption; they will be covered if they act for the licence holder (for example, if they are an employee, or someone who provides services, such as a printing company).

536.     It will be a defence for the person to show that he reasonably believed that:

  • he was not committing the offence because the relevant exemption or licence was held and complied with as required;

  • the arrangement was part of the National Lottery; or

  • the arrangement did not fall within the definition of "lottery" under Part 1.

Clause 244: Misusing profits of lottery

537.     This clause provides for a general offence of misusing the profits of a lottery. A person will commit the offence if the promoter has, in a statement appearing on the lottery tickets or in an advertisement for a lottery ticket, declared that the proceeds of the lottery are to be used for a particular purpose, and the person uses all or any of the proceeds for something other than the purpose stated. This offence is not restricted to any particular type of lottery, and can apply to any lottery where such a fund-raising purpose has been declared.

Clause 245: Misusing profits of an exempt lottery

538.     This clause applies only to certain kinds of exempt lottery (incidental non-commercial lotteries, private society lotteries and customer lotteries), in respect of which there are restrictions on the purposes for which the lottery can be promoted. Under this provision, it will be an offence for a person to use any part of the profits of the lottery for a purpose other than a permitted one.

Clause 246: Small society lottery

539.     This clause provides that a non-commercial society commits an offence if a small society lottery is promoted on its behalf without the necessary registration with the local authority. It is also an offence to fail to comply with the obligation to file a statement of the matters prescribed in paragraph 40 of Schedule 9 with the registering authority, or to submit false or misleading information in that statement.

Clause 247: Penalty

540.     The maximum penalty upon conviction for any of the offences contained in this Part is a term of imprisonment of up to 51 weeks for England and Wales, or 6 months for Scotland, together with a fine not exceeding level 5 on the standard scale (£5000 currently).

Clause 248: Preventing repetitive play

541.      Subsection (1) allows the Secretary of State to make regulations for the purpose of reducing or limiting "repetitive play" of lotteries, i.e. where people are given the opportunity to enter a number of lotteries in succession. These powers allow the Secretary of State to:

  • attach a specified condition to lottery operating licences issued under Part 5;

  • require the Commission to attach a specified condition to lottery operating licences issued under Part 5;

  • add additional specified conditions to those that exempt lotteries must comply with under Schedule 9.

542.     The Secretary of State is limited in her use of these powers by the requirement that a condition specified under subsection (1) must be intended to reduce the temptation to, or limit the opportunity for, a person to enter repetitive play lotteries.

Clause 249: Exclusion of the National Lottery

543.      This clause excludes all lotteries forming part of the National Lottery from the provisions of this Part. The National Lottery is regulated under the National Lottery etc. Act 1993 (c.39).

Clause 250: Territorial Application

544.     This clause sets out the territorial area over which this Part will have application. It provides that the provisions of this Part will apply to anything done in relation to a lottery in Great Britain, including things done by provision of, or by means of, remote gambling equipment situated in Great Britain. This is the case, regardless of where in the world the lottery itself is promoted. For example, this Part will apply as regards a person who prints promotional material in the UK for a lottery that is promoted in Spain.

Schedule 9: Exempt lotteries

545.     This Schedule sets out the requirements that must be complied with in order for a lottery to be classed as "exempt". Exempt lotteries are those which are exempt from the requirement to have an operating licence issued by the Commission, and can therefore be run without such a licence. There are four types of exempt lottery: incidental non-commercial lotteries, private lotteries, customer lotteries, and small society lotteries.

546.     Part 1 of the Schedule deals with incidental non-commercial lotteries, Part 2 with private lotteries, Part 3 with customer lotteries, and Parts 4 and 5 with small society lotteries and their registration with the local authority. Part 6 sets out certain additional powers of the Secretary of State, and Part 7 is interpretative.

Part 1: Incidental non-commercial lotteries

547.     This type of lottery replaces those permitted under section 3 (small lotteries incidental to exempt entertainments) and section 15 (provision of amusements with prizes at exempt entertainments) of the Lotteries and Amusements Act 1976 (c.32). An incidental non-commercial lottery is one that is incidental to a non-commercial event, and in respect of which, all the conditions set out in the rest of this Part are complied with. An event is a non-commercial event if the money raised from the event goes entirely to purposes that are not for private gain (paragraph 2). The conditions that must be complied with are:

  • The promoters of the lottery cannot deduct money from the proceeds of the lottery, for prizes or other costs, in excess of any sums prescribed by the Secretary of State in regulations;

  • The lottery must itself be for a purpose other than that of private gain;

  • The lottery cannot involve a rollover; and

  • Tickets must be sold at the event location during the event, and the result made public while the event is going on.

Part 2: Private Lotteries

548.     There are three types of "private lottery" which qualify as exempt lotteries:

  • A private society lottery: this must be promoted for, and by, members of a society, although people on the society's premises (as defined in paragraph 10(1)(b)) may also purchase tickets. The lottery may be promoted for a purpose for which the society is conducted, and the society can be any group or society, provided it is not established and conducted for purposes connected to gambling;

  • A work lottery: this must not make any profit (i.e. all the proceeds must be used for prizes or reasonable costs), and must be promoted for and by people working on the same premises (as defined in paragraph 11(2)); and

  • A residents' lottery: this must not make any profit (i.e. all the proceeds must be used for prizes or reasonable costs), and must be promoted for and by persons who live in a single set of premises (for instance, a hall of residence). The residency requirement can still be satisfied, where the premises are not the sole premises in which a person resides (paragraph 12(2)).

549.     All three types of private lottery must comply with the conditions set out in Part 2. These conditions concern:

  • Advertising;

  • Rollovers; and

  • Conditions relating to lottery tickets.

Part 3: Customer lottery

550.     Under Part 3, a customer lottery is a lottery run by occupiers of business premises, who sell tickets only to customers present on their premises. All the conditions in this Part must be satisfied. These include that:

  • the lottery must be arranged to ensure that no profits are made, i.e. the proceeds must be exhausted entirely in the reasonable expenses of the lottery and in the provision of prizes;

  • the lottery may only be advertised on the premises on which it is held; and

  • no ticket may result in the winner receiving a prize worth more than £50 (the Secretary of State can vary this amount by order, under Part 6 of this Schedule).

551.     Other conditions prohibit rollover, set rules on the frequency with which customer lotteries can be conducted, and make rules relating to lottery tickets.

Parts 4 and 5: Small society lotteries

552.     Under Part 4, a small society lottery is a lottery promoted on behalf of a non-commercial society (as defined in Part 1 of the Bill), the proceeds of which fall below the thresholds set out in that Part. Such a lottery will be exempt only if all relevant conditions set out in Parts 4 and 5 are complied with.

553.     Small society lotteries are distinguished from large society lotteries by the amount of the proceeds that they generate. A large society lottery requires an operating licence from the Commission under Part 5 of the Bill. A lottery is a large society lottery if:

    a)     its proceeds may exceed £20,000 (i.e. if it arranges to sell more than £20,000 worth of tickets); or

    b)     it is promoted wholly or partly during a calendar year in which the total proceeds of society lotteries promoted by that society may exceed £250,000; or

    c)     it is promoted at any time during the three calendar years immediately following a calendar year during which the society wholly or partly promoted a lottery that is a large society lottery by virtue of either a) or b).

554.     If the proceeds of a society lottery fall below these thresholds, the lottery qualifies as a small society lottery, and is regulated by these Parts of Schedule 9. The Secretary of State may change these thresholds in regulations.

555.     Only the members of the society who are authorised in writing by the society, or a person who holds an external lottery manager's operating licence, and is authorised by the society in writing, may promote a small society lottery. The lottery may be promoted for any of the purposes of the society. As with large society lotteries, at least 20% of the proceeds must go to a purpose for which the society is conducted. No single prize may be worth more than £25,000, a sum which reflects the fact that small society lotteries may have rollovers (this amount may be varied by the Secretary of State in regulations). Conditions are also set out relating to tickets and the price of tickets.

556.     A society must be registered with the local authority (in England and Wales) or licensing board (in Scotland) while any small society lottery is being promoted.

557.     The society must send to the local authority with which it is registered, a statement of the matters listed in paragraph 40(2). This includes information as to:

  • The arrangements for the lottery (dates, prizes, proceeds etc);

  • Amounts deducted by the promoters for prizes and costs;

  • Whether any other costs were paid, that were not paid out from the proceeds of the lottery.

558.     Two members of the society, or its governing body, must sign a statement sent to the local authority. If a local authority receives a statement, and they think that the lottery was, in fact, a large lottery, they must notify the Commission.

559.      The provisions for registration, in Part 5, set out the mechanisms for application, registration, refusal, revocation, cancellation and appeal against decisions made in relation to a small society lottery. Appeal is to the Magistrates Court and, in Scotland, to the Sheriff. There is an annual registration fee of an amount to be prescribed by the Secretary of State in regulations. Local authorities and licensing boards must notify the Commission of all societies registered with them for this purpose.

Part 6: Powers to impose additional restrictions

560.     Part 6 sets out the powers for the Secretary of State to impose additional restrictions, by regulations, on the exempt lotteries described in this Part:

  • requiring that tickets are distributed by hand rather than post; and

  • relating to the use of rollover arrangements.

561.     This Part also gives the Secretary of State the power to impose, by order, further conditions on exempt lotteries. Paragraph 60(2) lists the matters that such conditions may, in particular, relate to. Before exercising this power, the Secretary of State must consult the Commission.

562.     This Part also gives the Secretary of State the power, by order, to vary a monetary amount or a percentage which appears in this Schedule.

Part 7: General

Part 7 explains terms and phrases used in Schedule 9. It also clarifies that, other than in respect of private lotteries or customer lotteries, the provisions of the Schedule apply to activities on a vessel.


563.     This Part provides gaming allowances, and authorisation procedures for gaming and gaming machines for:

  • Members' clubs;

  • Commercial clubs;

  • Miners' welfare institutes;

  • Alcohol licensed premises; and

  • Travelling fairs.

564.     Under the Gaming Act 1968 these various associations, premises and entities are afforded particular gambling entitlements, either as of right, or with express permission. This Part modifies these various entitlements. The provisions of the 1968 Act are to be repealed. This Part does not provide any entitlements to conduct betting or lotteries, only gaming and the use of gaming machines.

565.     Part 10 of the Bill contains power for the categorisation of gaming machines, which is relevant to this Part. Part 18 of the Bill contains clauses which make provision for determining the value of a prize, and defining participation fee and stake.

566.     Where a reference is made in this Part to a Commission code of practice, it means a statutory code of practice, issued under the Commission's powers in Part 2 of the Bill.

Clauses 251 to 253: Definitions of eligible clubs

567.     There are three categories of eligible club: members' clubs, commercial clubs and miners' welfare institutes. To take advantage of the various gaming rights in Part 12 a club has to bring itself within one of these categories (although not all gaming rights are equally available to all three categories of club).

568.     Members' clubs must have at least 25 members and be established and conducted wholly or mainly for purposes other than gaming (unless the gaming is of a prescribed kind). They are to be established and conducted for the benefit of their members and not as a commercial enterprise. They are also to be established with the intention of operating on an ongoing basis, and not temporarily. Examples of such clubs would include political clubs or branches of the Royal British Legion. By virtue of the provisions set out at subsection (2) of this definition, bridge and whist clubs, and any other types of gaming clubs to be prescribed in regulations, will also be permitted to be members' clubs, even thought they are established for gaming. This maintains the position under the Gaming Act 1968.

569.     Commercial clubs are subject to the same conditions as members' clubs, except that members' clubs must not operate as a commercial enterprise. Commercial clubs can also be known as proprietary clubs. An example of a commercial club would be a snooker club. Like members' clubs, commercial clubs may also be gaming clubs, as long as the gaming is of a type prescribed in regulations. This maintains the position under the Gaming Act 1968.

570.     The definition of miners' welfare institutes has been amended from that contained in the Gaming Act 1968. Such institutes are associations established for social or recreational purposes, and the association is either managed by a group of miners' representatives or uses premises regulated under a charitable trust, where the trust has, at some time, received funds from one of a number of mining related organisations. The definition of "miners' representative" has been revised to take account of changes in mining communities and ex-mining communities. Furthermore, the alternative limb for qualification as a miners' welfare institute has been amended to allow for the broader social aims that institutes in ex-mining areas now promote.

Clauses 254 & 255: Exempt gaming

571.     This clause permits members' clubs, commercial clubs and miners' welfare institutes to provide certain facilities for gaming without the need for any express authorisation. In order to qualify for this exemption the gaming must meet a number of conditions:

  • It must be equal chance gaming, as defined in Part 1;

  • Stakes and/or prizes must be accordance with any rules or limits prescribed in regulations;

  • The club must not deduct any amounts from sums staked or won in the gaming;

  • Any charge for participation (which is broadly defined) must not exceed amounts prescribed in regulations;

  • The games played may only take place on one set of premises as there may not be any linking of games between premises; and

  • People may only participate in the gaming if they have been members of the club (or applied or were nominated for membership) at least 48 hours before playing, or are the genuine guests of such a person.

572.     These conditions are similar to those set out in section 40 of the 1968 Act, which the Bill repeals, with the exception of the restriction on linking games and the addition of a power to prescribe maximum stakes and prizes, which are new.

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Prepared: 25 November 2004