Lotteries toolkit – case studies
Case studies to help you deal with issues around lottery registrations.
Small society lotteries may attempt to avoid applying for a society lottery operating licence by obtaining two or more registrations with the same or different local authorities.
The Gambling Act 2005 states that a society lottery is a large lottery if its proceeds exceed £20,000, or if the aggregate proceeds in a calendar year exceed £250,000.
In cases where a society has separate branches with different aims and objectives, it is acceptable for them to hold more than one licence or registration. However, in cases where a society holds more than one registration and the aims and objectives of those societies are the same, this may constitute a breach of the threshold limits for small society lotteries.
Schedule 11, Part 4 of the Gambling Act 2005
In a case where a society applies for more than one registration, take care to ensure that the applicant societies have separate and different aims and objectives. This is also a good opportunity to ensure the society is a genuine one by asking for a copy of their terms and conditions and their constitution.
If the aims and objectives of the societies are the same and the combined proceeds are likely to exceed the threshold limits, advise the applicant to apply for a society lottery operating licence, instead. Please let us know if this occurs.
You may want to check, when the annual renewal fee is paid, that a society does not hold a duplicate registration with you or another local authority.
How to distinguish free draws from lotteries when the payment is described as a donation.
The definition of a lottery includes a requirement that participants pay to enter the lottery.
Section 14 of the Gambling Act 2005
This is different to a free draw where no payment to participate is made. Free draws are not regulated as gambling under the Act.
Some payments in free draws, such as standard rate postage, are excluded from the definition of payment to enter a lottery. Paying to enter includes paying money, transferring money’s worth and, in the case of free draws linked to product promotions, paying for goods or services at a price or rate which reflects the opportunity to participate in the draw.
Schedule 2 of the Gambling Act 2005
If you are required to make a donation to enter a prize draw this constitutes payment to enter a lottery if the other two elements of the definition are present: namely prizes and the outcome of the arrangement determined wholly by chance.
If you have the option of making a donation or being entered into the same draw without making a donation that would not be caught as payment to participate in a lottery.
Further advice on the distinction between lotteries and free draws is available in: Prize competitions and free draws: the requirements of the Gambling Act 2005.
Lottery ticket vending machines are generally used to dispense instant win lottery tickets, usually scratchcards or pull tab tickets.
Specific information must be displayed on private society lottery tickets.
Schedule 11, part 2, paragraphs 15, 17, 18 Gambling Act 2005
Each ticket must be a document and must state:
- the name and an address of each of the promoters of the lottery
- the class of persons to whom the promoters are willing to sell or supply tickets
- that the ticket is not transferable
- the price of the ticket.
Small society lotteries, registered with their local authority, are also required to display specific information on lottery tickets:
Schedule 11, part 4, paragraph 36 Gambling Act 2005
Each ticket must be a document and must state:
- the promoting society
- the price of the ticket
- name and an address of a member of the society who has responsibility for the promotion of the lottery, or the external lottery manager
- the date of the draw or information which enables the date of the draw to be determined (eg every Friday).
Some societies buy or rent vending machines to dispense their lottery tickets. Such machines are often supplied by licensed gaming machine suppliers but the operation and/or design of the machine must not constitute a gaming machine.
Advice on the distinction between lottery ticket vending machines and gaming machines is available in: Comparing lottery ticket dispensers and category B3A gaming machines, a quick guide for licensing officers.
Those who supply manufacture and/or site lottery ticket vending machines are not required to hold an operating or premises licence or any other permission. Where a lottery ticket vending machine is used it is the responsibility of the promoter of the lottery to ensure that it is operated lawfully.
Schedule 11, part 3 Gambling Act 2005
A customer lottery or raffle cannot make a profit so is not suitable for fundraising. All of the money collected through ticket sales must be used to pay for the prizes and any expenses incurred organising the lottery.
A customer lottery can only be run by a business for its customers at the time they are on the business premises.
Tickets must not be sold to children under 16 years of age.
No prize can be more than £50 in value.
No rollover of prizes from one lottery to another is permitted.
Only one lottery draw is permitted in each period of seven days.
Tickets must show the name and address of the organiser, the ticket price, any restrictions as to who may or may not buy a ticket, and state that the rights created by the ticket are non-transferable.
If the business is subject to a gambling premises licence customer lotteries are prohibited.
The position is different in Scotland where customer lotteries can be promoted on licensed gambling premises, without an operating licence from the Gambling Commission.
Private society lotteries cannot have rollovers
Private society lotteries are not allowed to have a rollover of unallocated prizes
Schedule 11, part 2, paragraph 19 Gambling Act 2005
This category of lotteries includes private society, work and residents lotteries.
Retention periods for small society lottery records
Under the Act small society lottery returns should be retained for 18 months and be made available for inspection by a member of the public.
Schedule 11, paragraph 55 Gambling Act 2005
However we request you retain returns for three years in the event that we may need to inspect them. Our interest, although unlikely, would be a regulatory one, hence the longer time period.
Guidance to licensing authorities, paragraph 34.53