Integrity of National Lottery Products
Request
- What independent statistical monitoring, draw verification, anomaly detection, machine testing and audit processes are currently used to assure the integrity of National Lottery products?
- How does the Commission assess whether modern lottery structures remain fair, transparent and socially responsible where increasingly remote odds are paired with powerful marketing built around life-changing outcomes?
- What scrutiny is applied when new lottery products or expansions are introduced?
- Clarity regarding regulatory oversight of:
- total revenues generated
- payout proportions
- operator retention structures
- treatment of unclaimed prizes
- surplus allocation pathways
- governance safeguards around charitable and public benefit distribution
- Additionally, what protections exist to identify and manage actual or perceived conflicts of interest involving bodies, personnel, governance structures or organisations connected directly or indirectly with National Lottery regulation or associated distribution frameworks?
Response
Thank you for your request which has been processed under the Freedom of Information Act 2000 (FOIA).
In your email you have requested:
- What independent statistical monitoring, draw verification, anomaly detection, machine testing and audit processes are currently used to assure the integrity of National Lottery products?
- How does the Commission assess whether modern lottery structures remain fair, transparent and socially responsible where increasingly remote odds are paired with powerful marketing built around life-changing outcomes?
- What scrutiny is applied when new lottery products or expansions are introduced?
- Clarity regarding regulatory oversight of:
- total revenues generated
- payout proportions
- operator retention structures
- treatment of unclaimed prizes
- surplus allocation pathways
- governance safeguards around charitable and public benefit distribution
- Additionally, what protections exist to identify and manage actual or perceived conflicts of interest involving bodies, personnel, governance structures or organisations connected directly or indirectly with National Lottery regulation or associated distribution frameworks?
Firstly, for context, it should be noted that the Gambling Commission is the UK's independent statutory body responsible for awarding the licence to run the National Lottery and regulating its activities to ensure safe and fair play.
As part of our responsibility as a regulator, we have three overriding statutory duties which underpin the fourth licence competition:
- to ensure the National Lottery, and every lottery that forms part of it, is run and promoted with all due propriety,
- to ensure the interests of every participant in a lottery are protected,
- subject to the above two duties, to do our best in making sure that the net proceeds of the National Lottery are as great as possible.
Under Section 11 of the National Lottery etc. Act 1993 (opens in new tab) the Secretary of State for Culture Media and Sport issues directions (opens in new tab) to us in relation to the exercise of our licensing functions, which we must comply with.
Under the Fourth National Lottery Licence, National Lottery regulation is outcomes focused. This places greater responsibility on the operator (Allwyn Entertainment Limited) to fulfil its obligations, whilst ensuring the Commission retains the ability to intervene if they do not. The following links set out the recorded information that we hold with regards to the questions in this request. Where possible, we have included references back to the specific questions you have raised.
WLA SCS 2024 Code of Practice (opens in new tab)
With reference to question 1, Allwyn Entertainment Limited is accredited to the World Lottery Association Security Control Standard (WLA-SCS), which is an internationally recognised framework developed by the World Lottery Association (WLA) to ensure the security and integrity of lottery gaming operations. The link above in the header contains information regarding the controls to be in place to secure and maintain this accreditation, including in relation to the integrity of lottery draws and products.
Fourth National Lottery Section 5 Licence, Section 6 Licences and Fourth National Lottery Licence: Regulatory Handbook (opens in new tab).
With reference to question 2, the Section 5 and Section 6 Licences set out the specific conditions that the operator of the National Lottery must comply with and the outcomes it should achieve as the Licensee. The Licences therefore include details regarding protecting the interests of participants.
The Regulatory Handbook then provides guidance on how the Commission will approach its regulation of the National Lottery. This sets out the regulatory approach, how performance of the Licensee is monitored, the reporting and assurance requirements and the Commission’s enforcement policy.
Licence decisions (opens in new tab)
With reference to question 3, summaries of the considerations involved in the introduction of new National Lottery products and other licensing decisions can be found via this link.
Fourth National Lottery Licence: Regulatory Handbook (opens in new tab)
With reference to questions 4a-4e, and as stated above, the Regulatory Handbook provides guidance on how the Commission will approach its regulation of the National Lottery. This sets out the regulatory approach; how performance of the Licensee is monitored; the reporting and assurance requirements and the Commission’s enforcement policy.
The Commission receives a suite of reports across a number of areas from the operator to monitor and assess the Licensee against the individual outcomes of the Licence. Volume 3 and Annex A set out the details of the reports the Commission receives, along with the expected contents.
With reference to question 4f, the Commission does not have a direct role in the distribution of National Lottery Good Causes Contributions.
Corporate Governance Framework (opens in new tab)
With reference to question 5, this is the Corporate Governance Framework that sets out The Code of Conduct for Commissioners and Code of Conduct for employees.
We can confirm that further recorded information is held by the Gambling Commission with regards to the specific questions raised (such as information with regards to draw integrity). However, it is considered that disclosure of this level of detail is commercially sensitive in nature and section 43 of the FOIA is engaged. Our considerations for the application of this exemption are as follows.
Commercial Interests – Section 43(1)
Section 43(1) provides an exemption from disclosure for information which is a trade secret. A trade secret is the property of its owner.
To be a trade secret, information should:
i. be secret, in the sense that it is not generally known among, or readily accessible to, people within the circles that normally deal with that kind of information;
ii. have a commercial value, because it is secret. Its disclosure should also be liable to cause real (or significant) harm to the owner or be advantageous to any rivals; and
iii. be subject to reasonable steps under the circumstances, taken by the owner, to keep it secret.
The information requested focuses on detailed procedural data for the execution of a lottery draw and therefore, constitutes a trade secret.
Based on the nature of the information requested and the definition outlined above, the Commission’s view is that this exemption is engaged. Section 43(1) is a class-based exemption and therefore there is no additional requirement to consider whether its disclosure would result in harm or prejudice, for us to engage the exemption.
The Commission’s view is that the disclosure of such procedural data would, or would be likely to, be prejudicial to Allwyn, the Commission and / or the National Lottery itself.
The Commission considers that the public interest in disclosing this information is outweighed by the wider public interest in protecting the commercial interests of Allwyn, the Commission and the National Lottery.
Our full public interest consideration for the section 43(1) exemption is set out below.
Public interest test
The factors the Commission has considered when applying the public interest test have been detailed below and our view is that the public interest lies in favour of applying the exemption.
In favour of disclosure
- The Gambling Commission is the statutory body responsible for awarding licences to run the National Lottery. As such, there is a public interest in members of the public having confidence that the Commission and Allwyn are being open and honest with the information it holds so that we can be held to account.
In favour of maintaining the exemption
- Disclosure of procedural details could create an opportunity for other market participants to adapt their future commercial behaviour and strategies on the basis of information which is not in the public domain. This could impact competitive market dynamics to the detriment of the National Lottery and consequently, negatively impact on Allwyn’s ability to meet its Good Causes forecasts.
- We also consider that disclosing the information at this point in time could discourage licensees from providing information to the Commission in future, which would likely prejudice the Commission’s ability to monitor and regulate the National Lottery.
Weighing the balance
Whilst the Commission aims to be open and transparent, there is a need to preserve the confidentiality of information submitted on that basis and to be mindful of the commercial sensitivities of information that is held.
Looking at all the circumstances of the case and the nature of the request, there is more than a 50% chance that prejudice would be likely to be caused to one or more of the parties by disclosure. Public knowledge of the information requested is unlikely to contribute to a proper understanding of the performance of the National Lottery and would potentially cause prejudice to Allwyn, the Commission, and the National Lottery itself.
Review of the decision
If you are unhappy with the service you have received in relation to your Freedom of Information request you are entitled to an internal review of our decision. You should write to FOI Team, Gambling Commission, 4th floor, Victoria Square House, Victoria Square, Birmingham, B2 4BP or by reply to this email.
Please note, internal review requests should be made within 40 working days of the initial response. Requests made outside this timeframe will not be processed.
If you are not content with the outcome of our review, you may then apply directly to the Information Commissioner (ICO) for a decision. Generally, the ICO cannot make a decision unless you have already exhausted the review procedure provided by the Gambling Commission.
It should be noted that if you wish to raise a complaint with the ICO about the Commission’s handling of your request for information, then you are required to do so within six weeks of receiving your final response or last substantive contact with us.
The ICO can be contacted at: The Information Commissioner’s Office (opens in new tab), Wycliffe House, Water Lane, Wilmslow, Cheshire SK9 5AF.
Information Management Team
Gambling Commission