Using SMS short codes for lottery promotion
There is growing interest in using mobile phone SMS ‘short codes’ in the promotion of lotteries. This involves licensed operators working with mobile phone operators and payment service providers.
This is a new initiative in the sector and may potentially involve an increased risk to compliance.
We have engaged with the Phone-paid Services Authority (PSA), the Institute of Fundraisers (IoF) and the Association for Interactive Media & Entertainment AIME) about this initiative.
As a licensed operator you must ensure that any product you offer is lawful and compliant with the Gambling Act and the Licence conditions and codes of practice (LCCP).
We do not approve lottery schemes or provide advice about how they should be organised. However, if you are considering using SMS short codes you should first ensure that the arrangements are lawful and compliant with LCCP and that any potential increased risk to consumers and the licensing objectives has been assessed and, if necessary, policies and procedures put in place to mitigate those risks.
Some of the issues you should consider and discuss with your legal advisors and any potential service provider before proceeding include:
- How will the social responsibility requirements such as age verification, customer interaction and self-exclusion be met given that these transactions could be anonymous apart from a telephone number. You need to assess the risk of problem gambling and underage play and, if necessary, introduce more stringent checks before a person is allowed to purchase a lottery ticket.
- All entrants must ‘receive a ticket’ which includes all of the required information at the time they pay to enter a lottery, a participant cannot be simply directed to a website or elsewhere to collect their ticket. If the ticket is sent to the participant electronically they must be able to save or print the ticket.
- Payment must be made to the promoter before a person can be entered into a lottery.
- Arrangements must be in place to ensure the secure holding of lottery proceeds including ‘ring fencing’ by a licensed ELM of all proceeds for the promoting society.
- Anyone who is not a member, officer or employee of a licensed society who is doing anything that constitutes ‘promoting’ a lottery must hold an External Lottery Manager (ELM) licence issued by the Commission.
- Anyone providing or adapting remote gambling software for use in a remote lottery must hold a gambling software suppliers licence issued by the Commission.
- The Gambling Act 2005 only relates to Great Britain (England, Scotland and Wales). A lottery operating licence issued by the Commission only gives a society authority to promote a lottery in Great Britain. Members of the public resident in other parts of the UK including Northern Ireland and the Isle of Man and the Channel Islands have separate gambling laws and you may wish to contact the authorities in those jurisdictions if it is intended to offer this service throughout the UK.
You should also be aware of other regulatory requirements. For example, the PSA are introducing special conditions, which you will need to follow as of the 1 October 2018, in order to offer lotteries using SMS short codes.
For more information visit the PSA website.