Written e vidence s ubmitted by the People’s Postcode Lottery (GA 46)

Response to Culture, Media & Sport Committee Inquiry into the Gambling Act:

- How effective the Act has been in its core objectives to

o ensure that gambling is maintained crime-free and conducted in an open and fair manner

o protect children and vulnerable people from the adverse effects of gambling


The People’s Postcode Lottery welcomes the Culture, Media and Sport Select Committee’s inquiry into the Gambling Act. While we have a small number of issues we wish to raise regarding the Act and its implementation, our biggest concern by far is the limitations that the Government currently imposes on charity lotteries. Through the imposition of monetary limits, we believe good causes across Britain are losing out on access to potentially millions of pounds in additional support that could be raised by charity lotteries at a time when many charities are suffering from wider cutbacks to public spending.


Generally, we believe that the Act has been effective regarding the operation of charity lotteries by ensuring gambling is conducted in an open and fair manner where players are concerned and also in its efforts to protect children and vulnerable people. The Act has also helped foster and promote a crime free environment for lottery operators in the United Kingdom. However, we would stress that a large part of this success is due to the considerable efforts made by Lottery operators themselves to adhere to the requirements of the Act and also the efforts of the Gambling Commission, as regulator, to work with operators to achieve these ends.


However, the People’s Postcode Lottery has concerns about how charity lottery operators are treated and feel that the Gambling Act as it stands precipitates an extremely uneven playing field between charity lotteries and the UK National Lottery. To this end, we would argue that the Gambling Act is not operating in an open and fair manner when placed in the wider context of how the National Lottery is regulated. While we recognise that the National Lottery is not subject to the requirements of the Gambling Act but rather the National Lottery Act, this policy decision has created a market monopoly for the National Lottery. To put into context, charity lotteries across the UK managed to raise £99.6million for good causes in 2009/10 [1] where as the National Lottery raised £1.6 billion over the same period [2] . This asymmetric growth puts charity lotteries at a serious competitive disadvantage to the National Lottery and undeniably means that we are unable to raise as much money for good causes as we would like to. Given the implications of the current financial climate, many local charities across Britain are simultaneously suffering from funding reductions and an increased demand on their services. If charity lotteries were regulated in a fairer manner, the negative effects of these cuts to charity funding could undeniably be somewhat reduced.


We feel strongly that this situation could be remedied through a more progressive approach to certain aspects of legislation within the Gambling Act. In particular, if the monetary limits, as outlined in Section 75 of the Act, were to be abolished for maximum single prizes and also the removal of limits on lottery proceeds, the People’s Postcode Lottery is confident that this could generate significant levels of additional funding for good causes across Britain. Based on our own estimates this could generate an additional £428million per year for good causes from the People’s Postcode Lottery alone [3] . If one were to factor in all charity lotteries, in time, this figure could potentially exceed an additional £1billion in additional support to good causes across Britain [4] .

- The financial impact of the Act on the UK gambling industry;


From the perspective of Charity Lotteries, we would argue that the Financial Impact of the 2005 Gambling Act has been a positive one for good causes across Britain. In 2009/10 alone, charity lotteries like the People’s Postcode Lottery, raised £99.6million for good causes across Britain. This success has been thanks to the considerable efforts made by charity lotteries to raise as much as possible for good causes within the tight monetary limits they are regulated by.


As the Committee will undoubtedly be aware, in relation to the regulation of charity lotteries, the Gambling Act stipulates that "proceeds… must not exceed £4,000,000 and the aggregate of the proceeds of lotteries promoted wholly or partly in a calendar year… must not exceed £10,000,000." [5] Within this, charity lotteries are also restricted in the top prize they can provide per draw to 10% of proceeds. This has severely impeded the ability of charity lotteries to generate unrestricted funding for their causes.


While the decision to increase the monetary limits on charity lotteries in 2008, by the previous UK Government, was a welcome move, it is our view this did not go far enough. By abolishing the limits imposed on charity lotteries this would come at no cost to the taxpayer [6] and provide additional support to charities, grass roots organisations and other good causes across Britain.

- The effectiveness of the Gambling Commission since its establishment, and whether it represents good value for money;


The People’s Postcode Lottery has enjoyed a very productive and professional working relationship with the Gambling Commission. We think that the UK Government’s decision to merge the National Lottery Commission and Gambling Commission into a single entity makes sense both financially and in policy terms. It is our view that if charity lotteries were regulated in the same manner as the National Lottery this would simplify the legislative and regulatory system even further by promoting greater efficiencies and opportunities.


We believe this move would create a more fair and equitable playing field for all lotteries operating in the UK and promote healthy competition in a system, which is unlike any other in the European Union. As highlighted throughout this submission, we are confident that if a new regulatory approach was taken towards charity lotteries this could generate a considerable amount of additional funding for local good causes in the UK and compliment the existing efforts of the National Lottery.

- What impact the Act has had on levels of problem gambling.


The People’s Postcode Lottery cares deeply about social responsibility, which is why we make every effort to ensure that safeguards are in place to minimize any risk involved in participating in charity lotteries. The People’s Postcode Lottery has undertaken two studies in the last 5 years in order to better understand problems associated with gambling. These included a European study on the relationship between participation in number lotteries and gambling addiction in the Netherlands’ by addiction research institutes IVO and CVO in 2007 and a UK Study by Professor Mark Griffiths of the International Gaming Institute at Nottingham Trent University in 2010. The studies overwhelmingly found that the Charity Lottery format is the safest in the world. In particular, Professor Griffiths contended in the concluding statement that the People’s Postcode Lottery "game in the European market place is unlikely to have much, if anything, of an effect on either ‘normal’ or ‘vulnerable’ players." [7]


In relation to underage individuals who might attempt to play the People’s Postcode Lottery, Professor Griffiths made clear in his report that this should not be a problem as there are appropriate measures in place to ensure that these individuals cannot purchase a ticket [8] . With regards to the wider community of charity lotteries, they share very similar operating procedures to the People’s Postcode Lottery and also represent a low risk to underage and/or problem gamblers. Therefore from the perspective of the People’s Postcode Lottery, we are not aware of examples of problem gambling being associated with the charity lottery format.

June 2011

[1] Gambling Commission – Industry Statistics (2009/10)

[2] National Lottery Distribution Fund Account 2009-10. Annual report and accounts ( 2010 ) . Pg 3.

[3] Calculation Based on the relative market size of UK to the Netherlands and total annual giving of the Dutch Postcode Lottery (2009) .

[4] Ibid.

[5] Gambling Commission - Licence Conditions and Codes of Practice. Supplement 5. Revision to licence condition 11, concerning lotteries ( February 2009) Pg. 2.

[6] DCMS. Explanatory memorandum to the Gambling Act 2005 (variation of monetary limits) Order 2008 . Pg 12.

[7] Griffiths, M. (2010) A Social Responsibility Risk Assessment of the People’s Postcode Lottery. International Gaming Research Unit. Pg. 18

[8] Ibid.

Prepared 1st August 2011