Select Committee on Culture, Media and Sport Written Evidence

Memorandum submitted by the Lotteries Council


  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

16 November 2006

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

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2007
Prepared 25 January 2007