Will less regulation mean more money for society lotteries?

The Culture and Media and Sport Select Committee have asked for written evidence for an inquiry into society lotteries. The Committee will be discussing how society lotteries could give even more to the good causes they support. NCVO will be responding to the inquiry, and we need  your experiences and views to help us to form our response.

We will also respond to the consultation announced by the Department for Culture Media and Sport, which should be released later this year.

Why are society lotteries important?

Lotteries are a valuable source of income for the voluntary sector. In 2011/12 the Big Lottery Fund distributed £758m to good causes, with society lotteries contributing £130m. It’s vitally important that society lotteries continue to thrive and give as much as they can to good causes.

Unlike the National Lottery, society lotteries are regulated by the Gambling Commission and require licences. Society lotteries must

  • give a minimum of 20% of their proceeds to good causes
  • not exceed annual turnover limits of £10m or exceed £4m on any individual draw
  • make sure small lotteries don’t award prizes over £25,000
  • make sure larger society lotteries award prizes over £25,000 or 10% of the proceeds of a single draw, whichever is greater.

The Inquiry

The Culture Media and Sport Select Committee’s inquiry is asking for written evidence to be submitted by 6 October.

The Committee wants to investigate how society lotteries can deliver the highest proportion of money to good causes.

This will centre around the inquiry discussing whether lowering the minimum requirement of 20% to good causes will increase the amount of money they get, as suggested by the CERB report published in February. The inquiry might also examine what would happen if the minimum threshold were raised to be in line with the National Lottery’s 28%, or if annual turnover cap were removed.

Weighing up the options

Raising the minimum threshold

At face value, raising the minimum percentage of money going to good causes to 28% could mean substantially more money for the voluntary sector. Although on average society lotteries give 44.5% of their proceeds to good causes, some of the largest society lotteries only give the minimum. There is a delicate balancing act in ensuring that any increase doesn’t mean other lotteries become unsustainable and are forced to close, or that fewer lotteries can be set up. This could ultimately mean that less money goes to good causes.

Lowering the minimum threshold

Lowering the minimum requirement could encourage more society lotteries to start up. Generally speaking, small lotteries and those just starting out face higher administration costs. They must funnel more money into their prizes and expenses to get ticket sales. The 20% minimum threshold can be daunting for organisations wishing to start lotteries who fear they might not be able to meet it. The danger is that lowering this minimum requirement might encourage some society lotteries to give less to good causes.

Finding a balance

Staggering the percentages of money going to good causes is a potential way to overcome this balancing act:

  • a lower minimum requirement for smaller and new society lotteries could offset their higher running costs
  • large, well-established lotteries could expect to contribute a higher percentage.

However, this approach would make regulation more complicated, and make it harder for organisations that run society lotteries to understand how much they should be giving.

Removing the annual proceeds cap

Removing the annual cap would lead to greater proceeds overall meaning larger amounts of money for good causes. Yet, at the same time, there would be potential for some society lotteries to grow extremely large. These could then compete with and threaten the National Lottery and the charities that receive Big Lottery funding.

You can help – tell us what you think

NCVO will be responding to the request for written evidence; we need your experiences and views to do this.

If you have opinions on the questions below, or other experiences running society lotteries that you’d like to share, please comment below or email karina.russell@ncvo.org.uk

  • Have you struggled to set up a society lottery because of the 20% minimum requirement? Would you look into setting up a society lottery if the requirement was lowered?
  • Would you support an increase of the minimum requirement to match the National Lottery’s 28%? Do you believe that it would be fairer that only older and larger society lotteries should be required to give more?
  • Would you welcome a relaxation or removal of the annual turnover or prize caps? Do you believe that the National Lottery and the money it gives to charities and other good causes needs to be protected?
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Karina Russell was NCVO’s policy officer. She covered issues around public services, improving commissioning and procurement practice and advancing the social value agenda.

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