1 Introduction
1. While they are a form of gambling, and are therefore
regulated under gambling legislation, society lotteries are intended
to be primarily a means of raising money for charities and other
good causes. The regulatory regime applied to them is accordingly
intended to be light, while ensuring that there is adequate protection
against the involvement of criminal organisations, or harm to
children and other vulnerable groups, and that the gambling itself
is conducted in a fair manner (the three principles of protection
that guide the Gambling Commission, which regulates the sector).
The vast majority of society lotteries are small, often local,
and raise sums of money that, though not substantial, are vital
for the work of the organisations they support.
2. The move over the last 20 years to a more relaxed
approach to gambling in general has also affected the society
lotteries regime, principally through changes made by the Gambling
Act 2005; but this in itself caused little concern until the advent
of some larger, 'umbrella' lotteries,[1]
advertised nationally, run by commercial operations and giving
close to the statutory minimum percentage of the proceeds of ticket
sales to the good causes they supported. Both the Gambling Commission
and Camelot, operator of the National Lottery, considered that
this development stretched the definition of 'society lottery'
beyond the intention of the legislation: the Gambling Commission
described the Health Lottery as being "clearly designed to
circumvent the proceeds limits—the gambling equivalent of
a tax avoidance scheme that exploits loopholes in the legislation"
and stated that "the Department [of Culture, Media and Sport]
needs to decide whether to block the loophole or allow the limits
to be breached and accept the possible damage to The National
Lottery".[2] However,
the Gambling Commission could find no reason in law to refuse
a licence to such a lottery and, when Camelot sought judicial
review of the Gambling Commission's decision, the court found
in favour of the Health Lottery.[3]
At that time, we were conducting an inquiry into the effectiveness
of the Gambling Act 2005, and we concurred with both the Gambling
Commission and Burnton LJ in his judgement that it was for the
Government and Parliament to determine whether multiple society
lotteries should be permitted.[4]
3. In the autumn of 2012, the Department for Culture,
Media and Sport [DCMS] announced it intended to launch a consultation
in the following year on whether the proportion of ticket receipts
returned to good causes by society lotteries should be increased.
No such consultation was launched. The DCMS subsequently explained:
During pre-consultation engagement with stakeholders,
and as the impact assessment and consultation options were developed,
it became apparent that this complex issue was too narrowly focused
and there was significant potential for unintended consequences,
for example reducing the amounts raised for good causes by unnecessarily
restricting the ability of society lotteries to operate. As a
result Ministers agreed we could delay the consultation until
2014 with a view to broadening its scope.[5]
4. By the summer of 2014, the lotteries sector was
unhappy that the consultation still had not been announced, and
the future regulatory structure for the industry remained uncertain.
We therefore decided to hold a brief inquiry ourselves. The terms
of reference, published on 24 July 2014, were as follows:
The Committee wishes to examine the role of society
lotteries and their place within a system which includes the Health
Lottery and the National Lottery. In addition, the following specific
issues are relevant to our inquiry:
· How to ensure that the market delivers
the maximum benefit to good causes
· Whether there is a case for relaxing
the regulatory requirements relating either to the minimum amount
of proceeds that a society lottery has to return to good causes
or in other areas
· The comparative regulatory positions
and protections attaching to society lotteries, the Health Lottery
and the National Lottery.
5. We received written evidence from 37 organisations
and individuals, 20 of which were charities that ran society lotteries
independently and/or benefited from 'umbrella' lotteries and a
further five of which were groups or organisations representing
charities benefiting from society lotteries.[6]
We also took oral evidence from the Health Lottery and People's
Postcode Lottery; the National Council for Voluntary Organisations
and members of the Charity Law Association; Camelot and the Lottery
Distributor Forum; the Gambling Commission, Mrs Helen Grant, MP,
Parliamentary Under-Secretary of State for Sport and Tourism,
Department for Culture, Media and Sport, and Mr Rob Wilson, MP,
Minister for Civil Society, the Cabinet Office. We are very grateful
to all who provided us with evidence.
6. Subsequently, on 11 December 2014, the DCMS launched
its consultation with 'A call for evidence exploring the current
balance across society lotteries, The National Lottery and competing
gambling products in raising funds for good causes and maintaining
player protection', asking for responses by 4 March 2015.[7]
The Minister for Sport and Tourism emphasised the need to give
the voluntary sector enough time to respond properly—in
this case twelve weeks—even though this meant any changes
in the law would have to await the next Parliament.[8]
1 See paragraph 14 below for a definition of these. Back
2
Source: Gambling Commission evidence to court in Camelot's application
for judicial review of the decision to licence the Health Lottery Back
3
http://www.judiciary.gov.uk/judgments/camelot-gambling-commission-judgment-22082012/
Back
4
http://www.judiciary.gov.uk/judgments/camelot-gambling-commission-judgment-22082012/;
Culture, Media and Sport Committee, The Gambling Act 2005:
A bet worth taking?, First Report of Session 2012-13, HC 421,
paragraph 230 (from now on 'Culture, Media and Sport Committee,
First Report') Back
5
DCMS (SOC0034), para 13 Back
6
The charities that run their own lotteries are Age UK Enterprises
Ltd, the Alzheimer's Society, the Essex and Herts Ambulance Trust,
the Local Hospice Lottery Ltd and the National Trust (though the
last of these also benefits from grants from the People's Postcode
Lottery and the National Lottery). Beneficiaries of the Health
Lottery via the People's Health Trust are Adur Voluntary Action,
the Conservation Volunteers, Number 1 Hatfield Community Resource
Centre, One Voice, the Royal Voluntary Service, Scope, Sustrans
and the Youth Skills Network. Beneficiaries of the People's Postcode
Lottery are De Paul UK, the Ellen MacArthur Cancer Trust, Missing
People, the Scottish Wildlife Trust and WWF-UK (who sent a joint
submission), the Northumberland Wildlife Trust and the Yorkshire
Wildlife Trust. We also received submissions from a group of Wildlife
Trusts (benefiting from the People's Postcode Lottery), from the
Health Lottery Society Lotteries (the 51 local Community Interest
Companies that make up the Health Lottery), the National Council
for Voluntary Organisations and the Lotteries Council (whose members
benefit from a variety of lotteries) and the National Lottery
Forum, representing the groups charged with distributing 94% of
National Lottery funding to good causes. Back
7 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/386228/20141210_-_Call_For_Evidence_Document.pdf
Referred to from now on as 'DCMS Call for Evidence, December 2014' Back
8
Qq 153-156 Back
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