Gambling sectors

Circumstances in which you do not need a lottery operating licence


 

Lotteries cannot be run for private or commercial gain.

There are some circumstances in which you do not need a lottery operating licence:

Prize competitions and free draws

You do not need a licence to operate prize competitions and free draws. More information is available in our detailed advice  Prize competitions and free draws - The requirements of the Gambling Act 2005 - December 2009. You should seek independent legal advice to confirm that your competition is lawful.

Fundraising

You can use certain types of lotteries to raise funds for good causes, for example societies, clubs and schools as well as registered charities. Read our introductory leaflet on Running a lottery, which sets out the available options or follow the links below for detailed information:

Small society lottery

The society in question must be set up for non-commercial purposes; e.g. enabling participation in or supporting sports, or cultural activity or charitable. Proceeds must not exceed £20,000 for a single draw and aggregate proceeds from lotteries must not exceed £250,000 in any one year. If you belong to a society or club that wants to run regular lottery draws or raffles, you can register with your local licensing authority to run a small society lottery. A fee will apply.

Promoting society and local authority lotteries - November 2009 contains in-depth guidance on the rules for small society lotteries.

Incidental non-commercial lottery

These are held at non-commercial events, such as school fetes etc. At such events where any money raised is not for private gain, you can run an incidental non-commercial lottery without a licence. All tickets must be sold at the location and the draw must take place during the event, which may last more than a single day. The promoters of the lottery may not deduct more than £100 from the proceeds in respect of the expenses incurred in organising the lottery, such as the cost of printing tickets, hire of equipment and so on. No more than £500 can be spent on prizes (but other prizes may be donated to the lottery) and the lottery cannot involve a rollover of prizes from one lottery to another.

Organising small lotteries - November 2009 contains in-depth guidance on the rules for incidental non-commercial lotteries.

Private society lottery

Any group or society, except those set up for gambling, and where the proceeds of the lottery go to the purposes of the society. If you run or are a member of a private society, as long as that society has not been formed for gambling, you can run a lottery or raffle for the benefit of that society without an operating licence from the Gambling Commission. Tickets can only be sold to members of the private society or guests on the society's premises.

Organising small lotteries - November 2009 contains in-depth guidance on the rules for private society lotteries.

Work, residents' and customer lotteries

Work lottery

These can only be run and played by colleagues at a particular place of work, but this type of lottery cannot make a profit so is unsuitable for fundraising. You can run a lottery for your employees at a single set of work premises without an operating licence from the Gambling Commission, unless your workplace is subject to a gambling premises licence. All of the proceeds from ticket sales must be spent on prizes and expenses.

Organising small lotteries - November 2009 contains in-depth guidance on the rules for work lotteries.

Residents’ lottery

These can only be run and played by people living at a particular address, but this type of lottery cannot make a profit so is unsuitable for fundraising. You can run a lottery for the residents living in a single set of premises without a Gambling Commission licence. All of the proceeds must be spent on prizes or expenses.

Organising small lotteries - November 2009 contains in-depth guidance on the rules for residents' lotteries.

Customer lottery

These can only be run by a business, at its own premises and for its own customers. No prize can be more than £50 in value. This type of lottery cannot make a profit, and so is unsuitable for fundraising. 

If you run a business and would like to run a lottery by selling tickets to customers on your business premises you can do so without an operating licence from the Gambling Commission, unless your business is subject to a gambling premises licence. The position is different in Scotland where customer lotteries can be promoted on licensed gambling premises, without an operating licence from the Gambling Commission. All of the proceeds (ticket sales) must be spent on prizes and expenses, there can be no profit.

Organising small lotteries - November 2009 contains in-depth guidance on the rules for customer lotteries.

Lottery ticket machines

You can sell tickets for a licensed or registered society lottery or private society lottery by means of a ‘paper’ lottery ticket vending machine. This type of machine dispenses a scratchcard or pull-tab ticket, and there is no element of skill or game play required from the purchaser.  The machine does not determine the outcome of the lottery.

Organising small lotteries - November 2009 and Promoting society and local authority lotteries - November 2009 contain details on where and to whom you can sell tickets for each kind of lottery

You do not need an additional licence to operate or supply these machines.

Lottery syndicates

You do not need a licence if you, as the organiser of a lottery syndicate purchase tickets from a lottery and distribute the winnings amongst the syndicate members. However, to run a syndicate, you must ensure that it is operating in a certain way in order to avoid being classed as promoting a lottery under section 252 of the Gambling Act 2005.

The examples below illustrate the difference between organising a lottery syndicate and promoting a lottery.

Example 1 - Syndicate organiser

In a traditional workplace / family syndicate, person A offers to purchase lottery tickets, using the money of persons B, C, and D.

As far as the lottery operator is concerned, person A is the only ticket holder. Therefore, the lottery promoter would only distribute any prize won to person A. Persons B, C, and D would not have a direct claim.

The fact that person A has agreed to distribute the prize, if any of the tickets win, amongst persons B, C, D, gives a contractual relationship between the parties.
This personal syndicate organizer (person A) would avoid being classed as a lottery promoter.

If a business operated syndicates as described, the same would apply.

Example 2 - Lottery promoter

If a person or organisation offers to purchase lottery tickets in the names/addresses of a number of individuals, as far as the lottery promoter and operator are concerned, it is those individuals that have entered the lottery. They would have a direct claim on any prize(s) won and the person or organisation purchasing the tickets on their behalf would not.

In this scenario, the person or organisation purchasing the ticket is a lottery promoter and would need to hold a licence. The lottery itself would also need to hold a licence.
More information about the promotion of lotteries can be found in Promoting society and local authority lotteries - November 2009.

 

Page last reviewed: December 2013

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