Society Lotteries - Culture, Media and Sport Contents

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  Back

4; 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 Referred to from now on as 'DCMS Call for Evidence, December 2014' Back

8   Qq 153-156 Back

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© Parliamentary copyright 2015
Prepared 25 March 2015