Lotteries tend to fall into three categories:
- Unregulated prize competitions or Free Draws
- Local Authority Registered Small Society Lotteries
- Gambling Commission Licensed Large Society Lotteries
We regularly handle all three types of lotteries, however for National Licensing Week we wanted to provide a reminder of what often feels like the least common type; the Local Authority Registered lotteries.
As a quick recap, a lottery must have payment to enter and prizes which are awarded solely by chance. Take away any of these elements (for example payment to enter) and it is no longer a lottery, and is likely to be a free draw or prize competition. A lottery which exceeds £250,000 in proceeds in a year, or £20,000 of tickets in a single draw, requires a Gambling Commission operating licence. Following the same path as all other forms of gambling, these operating licences can be expensive, hard to obtain and difficult to maintain (although of course still doable!).
A Local Authority Registered lottery, or small society lottery, provides a neat halfway house. Any lotteries which are below the £250,000 threshold simply require registration. A small society lottery must still be promoted by a non-commercial society for charitable purposes- or any other purpose not for private gain – and a minimum of 20% of proceeds must go to this good cause (with up to 80% able to be claimed for prizes and expenses).
The registration itself must be with the society’s Local Authority, and is normally a simple form with a fee of £40. An application might be refused if the society has previously held a GC licence which was refused or revoked, and any individuals associated with the running of the lottery must declare any relevant convictions. The lottery must be registered for its lifespan and there is normally an annual fee of £20.
There is a common misconception that this is where the role of the Local Authority ends. However, lottery returns must be submitted to the authority within three months of the date of the lottery draw, be signed by two members of the society, and will usually include:
- Dates of tickets sales and draws
- Arrangement for prizes (rollovers, donations)
- Proceeds
- Amounts applied to expenses (promoters etc)
- Amounts applied to the good cause
- Amount paid for prizes
- Any promoters (or change in promoter)
Furthermore, the society must retain written records of all draws, including unsold tickets, must be retained and can be inspected. The authority will inspect the returns, may request other documents to inspect too, and can revoke the licence if they see fit. It is important for local authorities to understand and review returns as they are submitted (and to make sure they were submitted in time).
One or more individuals in the society must ensure they are responsible for the compliance of the lottery, they must be open and honest with the local authority, and will be the ones named on the lottery tickets and signing the returns. They are also the ones who should be making sure that clear policies and procedures are in place to protect the lottery, the society and its customers – from both potential money laundering and the harms of gambling. Any training should be conducted by this individual – and they are the ones who would be called to answer questions from the authority.
A small society lottery, whilst not quite as hotly regulated as a GC operating licence, still has a number of rules it must follow…
The Tickets
- The ticket price must be the same for all tickets and all tickets must be paid for before entry to the draw is allowed. Caution and consideration should be given to payment methods
- Tickets must only be sold to individuals over 16
- Tickets must show the name of the society, the price, the organiser and the draw date
- If it is not a fixed date for the draw then the ticket must have information about how the date will be decided
- Tickets can be sold door to door, online, over the telephone or face to face but they cannot be sold in the street
- Draws must take place when advertised, and results should be communicated to players using the method by which they entered, or the method which they choose
The Prizes
- No single prize may be worth more than £25,000, even if it is donated
- Prizes can be rolled over another lottery run by your society, but that prize cannot be worth more than £25,000
Overall small society lotteries can be a great way to get started, but charities must be aware of the regulatory responsibilities that come with it.
Lots of small societies use External Lottery Managers to help run their lotteries, or feel free to reach out to amanda@woodswhur.co.uk or your usual Woods Whur contact for any help setting up or running a lottery.