The great society lotteries debate: It goes on

At the start of the summer, the government announced a consultation on society lotteries reform, looking at the maximum amount lotteries can raise, their prize draws and ticket sales.

The following changes were proposed:

• Increasing the maximum draw prize from its current limit of £400,000 to £500,000.
• Increasing the number of tickets society lotteries can sell to a value of £100m per year.
• Increasing the amount they can raise per draw to £5m.

The consultation had been expected for a while, after the Culture, Media and Sport Select Committee inquiry into society lotteries, and a previous call for evidence on lotteries by the Department for Culture, Media and Sport.

Giving or gambling?

The arguments in favour and against society lotteries being allowed to grow are well rehearsed, with opinions often shaped by whether they are viewed as a form of gambling or a way of giving.

In our approach to the proposed changes, we’ve been guided, as always, by the principle that the purpose of society lotteries is to raise money for good causes, and that managed responsibly they can be an ethical way of raising money.

Furthermore, the value of society lotteries to charities is growing: in the current challenging funding and financial environment, society lotteries are one of the few ways in which charities can successfully engage with their donors and supporters, raising awareness and money for the cause.

At the same time, we’re mindful that substantial changes to the way society lotteries operate could have a negative impact on the way the public view the good causes associated with them, with possible implications for public trust and confidence in charities.

NCVO’s view

We want to see society lotteries grow so that resources available to good causes are maximised in a sustainable way, while maintaining public trust and confidence in charities.

We have therefore supported these proposed changes:

• Increasing the per draw sales limit to £5m, since this is a reasonable rise that is roughly in line with inflation since 2009 (when the £4 million limit was set).
• Increasing the individual per-draw maximum prize limit to £500,000. Although prizes are almost always far below the current limits, there is a case for increasing the limit on the top prize as a way to allow societies the freedom to determine the top prize that would be appropriate to promote a particular lottery. But careful consideration needs to be given to the impact of this change on smaller society lotteries and the possibilities given to them to grow in the lottery marketplace.

On the proposed increase in the annual proceeds cap, we’ve been persuaded that the time is right to implement an increase that goes beyond an amount reflecting inflation, so we have supported an increase to £100m. Consultation with our members has indicated that keeping the threshold at the current level or only modestly increasing it would do nothing to alleviate the bureaucratic burden for the largest charities, and could potentially deter medium and moderately large charities from growing their fundraising through this channel.

We’re also supporting the changes aimed at reducing the regulatory burden for smaller charities, and allowing their society lotteries to grow by raising the thresholds for an individual draw and the annual sales limit.

But there is a but…

The changes we support would enable an increase in returns to good causes, removing existing and potential future barriers that prevent society lotteries to grow.

But some of the changes represent a very rapid rise from current levels, so it’s even more important that they’re accompanied by increased transparency and measures to ensure that lotteries are operated in a fair and ethical manner.

• In particular, more can be done to enable the public to make an informed choice about playing in a society lottery, based on knowing how much money is going to the cause. Society lotteries should communicate more clearly the breakdown of proceeds going towards prizes, expenses and good causes. Ultimately we’d like to see the proportion going to the cause being the defining characteristic that attracts the public to play.
• The substantial increase in the annual sales limit would mean it becomes necessary more than ever to address the issue of umbrella lotteries. For a while a loophole has allowed umbrella lotteries to bypass the maximum limits: although marketed under a national brand, in law they are considered groups of individual society lotteries, meaning that – provided 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.
• The changes to the regime should also be accompanied by strong measures for monitoring society lotteries and their role in the wider gambling marketplace. Charities themselves for example, while understandably wanting to build on their success in this area, may want to consider taking additional steps to avoid any perception that they are straying into any unethical forms of gambling.

Read our full response.