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Feature article: Small society lottery applications – things to consider

Application and registration process for small society lotteries (SSL)

Parts 4 and 5 of Schedule 11 of the Gambling Act 2005 (the Act) sets out the registration process for small society lotteries. When you receive an SSL application, you will need to refer to the Act’s definition of a small society lottery. This falls into two distinct areas:

a)    Society status – the society in question must be ‘non-commercial’ and must have been set up for one of the purposes listed in section 19 of the Act.  Society lotteries can only be run for non-commercial purposes and not for personal or private gain.

b)    Lottery size - the total value of tickets to be put on sale per single lottery must be £20,000 or less, or the aggregate value of tickets to be put on sale for all their lotteries in a calendar year must not exceed £250,000.  If the operator plans to exceed either of these values, then they may need to be licensed with the Commission to operate large lotteries instead.

Ways to set up a non-commercial society

There are several ways in which a non-commercial society can be set up. They might decide to go down a more formal route (if applicable) such as:

a)    register as a charity with the Charity Commission for England and Wales or the  Scottish Charity Regulator (OSCR) for Scotland

b)    apply to become a Community Interest Company (CIC)

c)    register as a Community Amateur Sports Club (CASC)

d)    set up as a Community Benefit Society - this is an organisation formed and regulated by the Financial Conduct Authority. The entity is governed by the Co-operative and Community Benefits Societies Act 2014.  However, these organisations are highly specialist in nature and can be very expensive to set up and maintain and are therefore probably not viable for a small society lottery.

A society set up as one of the above would qualify as a non-commercial society and be permitted to apply for a small society lottery registration.

It is important to remember though that it is not mandatory for a non-commercial society to set themselves up in the formal ways listed above.  The Guidance to Licensing Authorities (GLA) provides further advice when considering small society lottery applications (Part 34).  It says that as part of the application process, you are encouraged to ask applicants for:

a)    a copy of their terms and conditions

b)    a copy of their constitution to establish that they are a non-commercial society, and

c)    the local authority may also choose to require applicants to provide a declaration, stating that they represent a bona fide non-commercial society.

The GLA further says that you should also consider whether such a declaration is sufficient in the particular circumstances of each case or whether there are additional factors, such as an unusual or novel purpose of the society, which may suggest that further enquiry is needed.  For every application you receive, you must establish that they are a non-commercial society and not for personal or private gain.

So how do you decide if a society is non-commercial in these circumstances?

The Explanatory Notes to section 19, provides an example.  It says genuine societies that are set up to provide a child with medical care or sports sponsorship are likely to be non-commercial societies and not private gain.

However, a society set up for political purposes would need to be set up to promote the party or group as a whole in order to be non-commercial.  If they were set up to raise money to pay an individual political candidate or candidates, for their own benefit, this would be private gain and they would not be permitted to apply for a small society lottery registration. 

It is therefore important that you carefully consider whether the constitution/ aims and objectives of the society are non-commercial and have been set up for one of the purposes listed in section 19 of the Act.

Please remember that while the Commission aims to adopt a position of support and assistance for local authorities in carrying out your functions, ultimately, the responsibility for every licensing decision rests with the local authority itself, in line with the principle of local accountability.  It is therefore for each local authority to decide whether you are satisfied an applicant is a bona fide non-commercial society.

Other requirements for setting up a small society lottery

There are also other requirements that must be met with regards to setting up a small society lottery.

Although the Act is not explicit in stipulating the number of members required within a small society lottery Schedule 11, Part 3, paragraph 39 of the Act indicates the minimum number that a society must have. 

It states that all lottery returns must be signed off by two appointed members of the society, who are aged 18 or older, and a copy of their letter(s) of appointment must be submitted with the lottery return(s). 

It is therefore reasonable to advise that the society must have at least two members within their society, who must be aged 18 or older, and have been appointed for this purpose (in writing) by the society or, if it has one, its governing body.  A copy of their letter or letters of appointment must be evidenced and provided to you.

Finally, it is important to note that a small society lottery is required to register with the applicable local authority with which their principal office is located.  If you believe that a society’s principal office is situated in another area, you should inform the society and the other local authority as soon as possible.

To assist you and/ or small society lottery applicants, further information on the requirements for small society lotteries can be found in Part 34 of the Guidance to Licensing Authorities and our advice note Promoting society and local authority lotteries.

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