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Long-Awaited Relaxation Of Rules On Exempt Lotteries Announced

After a year of delay, the Government has finally announced that the relaxation of the rules relating to various forms of exempt lotteries will come into force on 6 April next year.

The Legislative Reform (Exempt Lotteries) Order 2016 was laid before Parliament in November and will become law after the expiry of a period of 40 days, without the need for parliament to vote further on the matter, in accordance with the affirmative resolution procedure.

Schedule 11 to the Gambling Act 2005 provides for various forms of exempt lotteries. The legislation intends to permit raffles to be run on a small scale, without the need for a licence from the Gambling Commission or registration with a local authority. Examples include raffles between inhabitants of a single residential premises (so-called residents’ lotteries) and those between visitors to a commercial premises (customer lotteries), which are not run for profit.

The forthcoming changes have long been called for by many in the lotteries and charity sectors. Essentially, they remove various restrictions on raising money for good causes via raffles in the workplace and resolve an area of ambiguity concerning incidental non-commercial lotteries.

A lottery held at a single-site workplace is exempt if it is promoted by a person working at the premises and if tickets are only sold to co-workers. It may not be advertised elsewhere than on the premises. However, crucially, at  present, these lotteries are only exempt from the need for a licence or registration if they make no profit at all. This applies even to schemes whereby the proceeds go to a good cause. This has obviously prevented charities from raising money in this way and they have questioned the need for regulation of what is essentially a lucrative potential revenue stream which presents little regulatory risk.

The lotteries regulator, the Gambling Commission, agrees that such schemes should be able to be conducted on a small scale without regulation, and thus from 6 April, workplace lotteries will be able to be held for the benefit of a good cause without the need for a licence or registration. I recently advised a charity client who was raising money via raffles in workplaces, in the mistaken belief that they were exempt, so  the change will come as a welcome relief to that organisation! It should however be noted that the exemption will not apply to multi-site workplace lotteries, that is to say to companies who employ workers at more than one location, although each individual site will be able to run its own exempt lottery.

The other area to be relaxed by the new rules is the law on incidental non-commercial lotteries and here, a current ambiguity is set to be resolved. Currently, such lotteries are only exempt if they are run at, and tickets for them sold only to those attending, an event which is itself non-commercial, in the sense that none of the proceeds of the event are applied for private gain.

In another case I advised on recently, a football club was running raffles for good causes at charitable events where all of the proceeds of the events themselves went direct to the charity. Those raffles were properly and legitimately to be considered as exempt from regulation. However, the club was also holding raffles at business lunches and dinners and at match-day hospitality events. Although the proceeds of those raffles themselves were going to good causes, the proceeds of the events otherwise went into the general coffers of the football club and therefore arguably be applied for private gain. Thus in order to be safe, those raffles should have been authorised by a licence or registration.

Under the new rules, raffles promoted for good causes in a way that is incidental to an event will not be regulated, even if the event itself is not non-commercial. Again, this opens up fundraising possibilities for charities in a way that presents little or no regulatory risk. Although the requirement to sell tickets only at and during the event will remain, the need to announce the result at the event will be scrapped.

In this last respect, the Gambling Commission has been instrumental in explaining to the Minister the need for an amendment. By way of example, it quoted balloon races, whereby participants affix a tag with their name and contact details to balloons, which are then  released at an event. The balloon that travels the furthest wins the prize, but for obvious reasons, the result cannot be announced at and during the event itself, coming to light some time thereafter.

These changes are to be welcomed for widening fundraising opportunities in a common sense way, at a time when charities are increasingly competing for revenue and feeling the pinch in terms of criticism of their methods. If you are in any doubt as to what will and will not be permitted after 6 April next year, please do not hesitate to contact me, or any of the team.