Conclusions and recommendations
1. In our approach
to the suggestions of various changes to the regulatory regime
for society lotteries, we have been guided by the principle that
the purpose of society lotteries is to raise money for good causes.
Unlike other gambling products, they are therefore exempt from
gambling and lottery taxes; and the regime governing them should
be light-touch and encourage the maximum return for good causes.
At the same time, the regime should be carefully adjusted to avoid
any perception that charities may be being used mainly as devices
to further commercial interests. (Paragraph 34)
2. We have also been
guided by the clear intention of Parliament in 1993—which
we do not perceive to have altered—that there should be
one National Lottery. We do not consider that there is any indication
that the Lottery is being significantly affected by any of the
society lotteries currently operating, but we accept that the
potential for a competitor remains, especially if an External
Lottery Manager, in addition to receiving the reasonable expenses
permitted by the Gambling Commission, can also profit from promoting
its lottery. (Paragraph 35)
3. A sliding scale
of the percentage of ticket prices to be donated to good causes
has some attractions. We consider that there should be more distinctions
between society lotteries, lifting burdens on the smallest and
increasing them as the lotteries grow in size. (Paragraph 49)
4. We are sympathetic
in principle to the idea that both ticket sale limits and prize
limits should be reviewed, but we note the concern expressed by
the NCVO and others that society lotteries should not become just
another gambling product. We see clear dangers, not least in possibly
tempting societies to take risks in advertising prize limits that
they cannot afford and in losing contact with their real supporter
base. As far as the National Lottery is concerned, though there
is a theoretical risk—especially if caps were removed completely—it
seems to us that in practice there is no immediate risk of a real
rival coming up from the ranks of the society lotteries. (Paragraph
50)
5. Umbrella lotteries,
such as those run by the Health Lottery and PPL, are in law groups
of individual society lotteries, marketed under a national brand.
However, provided that none of the individual lotteries exceeds
the current limits on proceeds and prizes, the total amount that
the umbrella lottery is permitted to raise is the aggregate of
the maximum amounts each of the constituent lotteries may raise:
in other words, an umbrella lottery formed of ten large society
lotteries would be permitted to raise ten times the maximum £10
million for a single lottery per year. We consider it wrong that
the maximum limits on society lotteries should be bypassed in
this way. (Paragraph 51)
6. We therefore recommend
an amendment to legislation to recognise a class of umbrella lotteries,
with its own set of limits on individual draws, annual sales and
prizes. A number of options are possible: setting overall limits
on the amounts that may be raised or paid out in prizes, limiting
the number of individual society lotteries that may join together
under an umbrella lottery (and thus limiting the multiplier effect)
or stipulating different 'large society lottery' limits on the
constituent societies. We recommend that the Gambling Commission
consult widely on such a change. (Paragraph 52)
7. We note that there
have been no increases since 2005 in the caps on sales and prizes
for small lotteries. We received no evidence suggesting specific
figures for these caps, and accordingly we consider that the Gambling
Commission should review the caps on ticket sales (for both a
single draw and for the annual aggregated draws) and on prizes
for small lotteries, and should make specific recommendations.
(Paragraph 53)
8. As far as individual
large lotteries are concerned, we note that some of the new limits
suggested by the Lotteries Council represent a very rapid rise
from the current level. We recommend that the Gambling Commission
should consider whether the limits on ticket sales and prizes
should be relaxed, bearing in mind that the regime for large lotteries
was changed in 2008, more recently than that for small lotteries.
We recommend that the Gambling Commission consult on the appropriate
levels. (Paragraph 54)
9. We also recommend
that the limits on society lotteries be reviewed every three years,
and that the Gambling Commission gather and publish information
on the annual turnover, single draw size and maximum prize awarded
by individual society lotteries to demonstrate the degree to which
societies are finding the current limits restrictive. (Paragraph
55)
10. We understand
that the requirement for at least 20% of the ticket receipts for
each lottery to be given to the good cause from the offing may
well deter societies from running lotteries, when many of the
expenses (for organising the lottery and recruiting players) will
also be incurred at the start. We therefore recommend the amendment
of the present 20% minimum requirement to allow newly-created
small society lotteries to spread it over an extended period,
possibly three years. (Paragraph 60)
11. We recommend that
the Government draft an amendment to the Gambling Act 2005 to
achieve this, taking into account the issues raised by the Charity
Law Association about distinguishing between repeat and one-off
lotteries, and the need to make provision for lotteries that do
not survive for the full three years. We note the suggestion that
this could be achieved by requiring lottery licence holders to
use their 'best endeavours' to ensure a return of 20%, and by
requiring the Gambling Commission to ensure that its licensing
processes filter out any would-be 'phoenix' lotteries, being set
up with the intention of folding within three years. We consider
that the Government should look at these and other options. (Paragraph
61)
12. We were given
two options for enabling other lotteries to benefit from some
flexibility in developing new products. We ask the Gambling Commission
to consider the advantages and disadvantages of these suggestions,
and any others in this area, and make recommendations to Government
accordingly. (Paragraph 62)
13. There is a public
interest in transparency, and we therefore endorse the recommendation
that information about the proportion of lottery receipts given
to the good causes, distributed in prizes and used for operational
expenses should be clearly shown on each ticket. We also recommend
that the Gambling Commission should maintain a database of this
information for each lottery on its website, so that the public
can make informed decisions about whether or not they should take
part in a lottery. (Paragraph 66)
14. We accept that
lotteries have to invest in order to grow, and that the total
money raised is important, but we remain of the view that, to
be society lotteries, they must show a substantial return to their
good cause. We have ruled out an increase in the minimum contribution
to good causes rule, in the light of the need of newer and innovating
lotteries for greater flexibility, but we do not consider it appropriate
that large, well-established lotteries should provide only that
minimum. We therefore recommend a return to a cap, to apply only
to the largest lotteries, for all operating costs other than prizes
and money set aside for roll-overs. From the information provided
by the Lotteries Council, we think the initial rate should be
set at 35%. This rate also should be subject to regular, three-yearly
reviews by the Government. (Paragraph 71)
15. In the event that
the Government decides not to re-introduce a cap on operating
costs, we recommend that the largest lotteries be made subject
to Lottery Duty on the same basis as the National Lottery, unless
they are giving at least 32% of their proceeds to good causes.
(Paragraph 73)
16. We recommend that
the Gambling Commission look again at whether the administrative
burdens of applying for a licence could be simplified any more
for small, start-up lotteries, and at whether other regulations
on lotteries are disproportionately burdensome for the benefit
produced. (Paragraph 74)
17. We recommend that
the Government and Gambling Commission consider whether it would
be feasible to allow the private sector to run lotteries on behalf
of good causes, given the potential major benefits to good causes.
It may be the case that commercial entities would have to be licensed
to run such lotteries, but it may be possible to establish a relatively
light-touch regime for existing companies for which the running
of a lottery is clearly part of their corporate social responsibility
activities rather than a commercial opportunity. (Paragraph 76)
18. We endorse the
suggestion that any society licenced to run a lottery should be
enabled to run a lottery on behalf of another good cause, as long
as the customers were clearly informed of the ultimate beneficiary.
(Paragraph 77)
19. Like Camelot and
the Gambling Commission, we are concerned that the evolution of
online gambling is removing the distinction between society lotteries
and betting. We recommend that the Gambling Commission advise
the Government on all three measures recommended by Camelot, to
determine which would be most effective in reducing consumer confusion.
(Paragraph 84)
20. We think that
the value of society lotteries to the charitable and voluntary
sector means that the changes to the regime we have recommended
are important. We see no reason why the Gambling Commission and
the DCMS should not press ahead to be ready with proposed changes
for the new Government soon after the general election, given
the lack of party political divisions in this area. (Paragraph
85)
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