Memorandum submitted by the Lotteries
Council
INQUIRY: CALL
TV QUIZ SHOWS
I am writing in response to the Culture, Media
and Sport Select Committee's invitation for written evidence regarding
your recently announced inquiry into Call TV quiz shows. The submission
has been written specifically for the Committee.
The LC has previously responded to the Committee's
inquiries into the National Lottery and welcomes the opportunity
to contribute to this inquiry, having campaigned against too-easy,
pay-to-enter prize competitions for a decade or more. The Council
has also recently responded to the Gambling Commission's Issues
Paper on Prize Competitions and Free Draws, the subject matter
of which shares some common ground with your Inquiry, and we replicate
herein some of the concerns expressed in that response.
The LC is concerned that the Gambling Act 2005
fails to define adequately the grey area between revenue-earning
prize competitions (such as those on Call TV quiz shows) and lotteries.
The Council fear that this failure could lead the newly formed
Gambling Commission into potentially neglecting all three of their
primary regulatory objectives in this respect: to keep crime out
of gambling; to ensure that gambling is conducted fairly and openly;
and to protect children and the vulnerable.
1. Introduction
For the benefit of those unfamiliar with our
organisation the Lotteries Council is a not-for profit association
whose membership currently totals over 160 organisations licensed
to operate lotteries, either by the Gambling Commission or local
authorities. The LC was formed over 25 years ago with the aim
of representing the common interests of lottery fund-raisers large
and small, in all areas from charities to sporting bodies, all
of whom are working diligently to comply with complex gambling
laws. The growth in membership continues to be in the charitable
sector, whilst the membership among sport-supporting organisations
has stabilised.
2. Consistent opposition
The LC has consistently opposed the promotion
of pay-to-enter lotteries—such as those found on Call TV
quiz shows—operating for commercial gain and which are open
to people of all ages who are first able to answer a ridiculously
easy question. The LC's original concern was for the good causes
supported by its members' lotteries but this is now augmented
by the concern over the total lack of protection for the young
and the vulnerable, who do not realise they are indulging in a
gambling activity.The LC is convinced that such a burgeoning unregulated
lottery market sector cannot help but impact upon the fundraising
of all legitimate lotteries including the National Lottery.
3. Unfair advantage
It is claimed by some not involved with good
cause lotteries that media based, no-skill prize competitions
are simply a form of harmless family entertainment. The LC believe
that this is even more so the case with our members' lotteries
and their generally lower entry fees. Unfortunately for them,
these almost identical forms of entertainment have been treated
very differently by the regulators. Whereas the fee in a legitimate
lottery is recognised as being part donation and part stake in
a game of chance and the promotion closely regulated as a form
of gambling, that for a prize competition pseudo-lottery is not.
In the latter case, therefore, there is neither any requirement
to account for the proper conduct of the promotion nor to make
any donation to a worthy cause. This lack of any need to comply
with any licensing or donation requirements gives such promotions
an unfair advantage over legitimate lotteries.
Lotteries promoted by the broadcast media have
an even more unfair advantage than this. It is believed by a minority
of people unfamiliar with lottery fundraising that media-based
pseudo lotteries cannot impact upon societies' lotteries because
the latter are supported only by people who sympathise with the
good cause. Whilst this may frequently be true of the agents or
collectors of the stake money, in an overwhelming number of cases
the participant agrees to enter only because that particular lottery
has been the first to present itself to that individual or household.
If another local lottery has made an earlier successful approach,
the answer to the second one will frequently be: "No thank
you; we're in the XX lottery".
When the "first caller", therefore,
is a look-alike lottery, presented with the impact of a television
programme inside the family home, and with a quick and easy, delayed-payment
means of entry, the answer to many of the subsequent approaches
by the canvassers and mailings of society lotteries is inevitably
going to be a refusal. Why bother with Standing Orders, Direct
Debits, or always having to be home when the collector calls when
you can enter this easily without even having to get up to answer
the door?
Such alternative means of entry were denied
to society lotteries for many years on the grounds that they constituted
entry by machine, as were radio and TV platforms from which to
advertise lotteries on the grounds that this would in some way
breach broadcasting codes. So the situation currently exists whereby
legitimate lotteries operating under strict regulation and donating
to good causes are denied an equal footing with commercial lotteries
hiding behind a scintilla of skill and having no public accountability.
4. Regulation or not?
The current proliferation of dedicated TV game
channels is a direct result of the refusal of the authorities
to act upon some blatant examples of unlawful lottery promotions
in recent years, and there is a real danger that if the time should
come when society lotteries are able to promote on an equal footing,
the market place will have become exhausted. The Gambling Commission
has stated that Prize competitions will remain under the Gambling
Act 2005, free of statutory regulatory control. [11]The
LC see no justification for legitimising pay-to-enter competitions
without registration limits and accountability. Indeed, we believe
that registration of this type of promotion with the newly formed
Gambling Commission could be advantageous not only to the licensing
objectives but also the funding of the Commission. This is a practice
exercised in some European countries.
Minimum skill, pay-to-enter competitions appeal
directly to children and a wide range of consumers, but are unregulated
by the GC and have no codes for recognising and dealing with social
responsibility issues.
5. Negative implications
The Lotteries Council believes that the negative
implications of these competitions are threefold:
— They appeal directly to children
and a wide range of consumers but are unregulated by the Gambling
Commission and have no codes for dealing with social responsibility
issues.
— They compete directly with lotteries
for good causes for the consumer's money.
— They impinge on the principle
that lotteries should be the preserve of good causes.
6. Free Entry
Under existing gambling laws, any game that
has a fee to enter and "does not depend to a substantial
degree on the exercise of skill" is classified as a lottery,
requiring a licence from the Gambling Commission and a minimum
of 20 per cent of the revenues to go to charity. Over the years
a growing number of pay-to-enter "prize competitions"
have developed that operate as de facto lotteries. We have
seen the growth of these, most recently, in the form of Call TV
quiz shows. By featuring a derisory level of skill and by having
an alternative free entry route (usually on a website) these competitions
ultimately select winners from thousands of correct answers by
a draw. Exploiting this legal grey area, by offering a free entry
route, commercial organisations are able to circumvent the proper
regulatory control—and corresponding cost—that all
society lotteries are bound to.
There exists unease among some of the Council's
members that so long as the free entry route exists, means may
be found to use it to continue to legitimise those minimal skill,
pay-to-enter prize competitions employing a draw, which Section
14 of the Act was intended to prevent.
7. Defining the difference
Prize competitions are those in which success
depends, at least in part, on the exercise of skill, judgement
or knowledge by the participants. This distinguishes them from
lotteries, where either success depends wholly on chance or, in
a complex lottery, the first stage relies wholly on chance.
Section 14(5) of the Gambling Act 2005 addresses
the distinction saying that "a process which requires persons
to exercise skill or judgment or to display knowledge shall be
treated for the purposes of this section as relying wholly on
chance if:
(a) the requirement cannot reasonably be
expected to prevent a significant proportion of persons who participate
in the arrangement of which the process forms part from receiving
a prize; and
(b) the requirement cannot reasonably be
expected to prevent a significant proportion of persons who wish
to participate in that arrangement from doing so."
Despite this the Gambling Commission has stated
that the current law is unclear on the distinction between lotteries,
prize competitions and free draws. [12]The
definition of "significant proportion" in this clause
remains problematic. The Gaming Board (the Commission's predecessor)
expressed its view that "the organisers of many so called
competitions and free draws have made use of this apparent lack
of clarity to run what are in reality unregulated lotteries."
The Lotteries Council is happy to provide for the Committee a
copy of its previously mentioned response to the Gambling Commission's
Issues paper on Prize Competitions and Free Draws to illustrate
further its concerns in this regard.
8. Issues raised for discussion
On the issues raised in the Inquiry announcement,
the Lotteries Council would comment as follows:
— The procedures for handling
calls from viewers: Whilst there would appear to be an urgent
need for consumer protection measures in some TV quiz programming,
the Council's main concern is for programmes where viewers are
encouraged to make a premium rate telephone call for the chance
to be entered into the skill stages of a competition. This right
of a tiny minority of callers to progress to the next stage constitutes
a prize in itself; also they are chosen by lot or chance from,
in some cases, many thousands of calls; and then they have to
pay by means of a premium rate telephone call to be among those
from whom the selection is made. These constitute the three elements
of a lottery, and a lottery which is open to any member of the
public to enter must be regulated by the Gambling Commission or
a local licensing authority. If it is not, it is an unlawful lottery
and should not be permitted on the airwaves.
— Information provided to viewers
on the costs of calls and their chances of participating and winning.
It is the Council's view that it should be made abundantly and
repeatedly clear to participants what is the cost of the average
call; what percentage of that cost goes to the telecoms provider;
and the odds of proceeding to the next stage.
— The role of Call TV quiz
shows in raising income for broadcasters. The LC has no objection
to TV channels using quiz shows as a revenue stream provided that
participants are required to exercise substantial skill to be
in with a chance of winning a prize. Where skill of a derisory
level leads to a draw, the promotion should be regulated as a
game of chance.
— The impact, financial or
otherwise, of participation on viewers. It would be illogical
for the Government to ignore the social effects of repeat play
on participants in Call TV quiz shows whilst making social responsibility
compliance a mandatory requirement for legitimate lotteries operated
by small societies having a fraction of the TV shows' turnover.
— Whether further regulation
of Call TV quiz shows is required. The Lotteries Council considers
it vital for some form of regulation to be imposed on such programming
considering how much of it is in breach of the law and social
responsibility codes. Whilst the Gambling Commission will be empowered
to prosecute those competitions it considers to be unlawful lotteries,
it will have no jurisdiction over quiz shows which feature an
adequate level of skill, however socially irresponsible they may
be.
These, then, are the concerns of those organisations
raising funds for good causes through the operation of local lotteries.
If you require any further information then
please contact Robin Grainger from Quintus Public Affairs who
are co-ordinating our work on Gambling issues. He may be reached
on: 020 7976 1580 or robin@quintuspa.com.
16 November 2006
http://www.gamblingcommission.gov.uk/UploadDocs/pressrelease/Documents/Discussion_paper.pdf
11 Gambling Commission: Prize Competitions and Free
Draws Issues Paper, August 2006- Back
12
Gambling Commission: Prize Competitions and Free Draws Issues
Paper, August 2006-page 1. Back
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