Guidance
The 2026 money laundering and terrorist financing risks within the British gambling industry
The Gambling Commission's money laundering and terrorist financing risk assessment of the British gambling industry for 2026.
15 - Society lotteries and external lottery managers (remote and non-remote)
Sector rating
| Sector | Previous overall risk rating | Current overall risk rating |
|---|---|---|
| Society lotteries (remote and non-remote) | Low | Low | External Lottery managers (remote and non-remote) | Low | Low |
Society lotteries and external lottery managers (ELMs) remain low risk for money laundering. As a product, lotteries pose limited potential for money laundering exploitation, although there is the potential for the integrity of operations to be undermined or for lottery proceeds to be misused.
Large society lotteries licensed by the Commission are a sector of significant size. In the period April 2024 to March 2025, large society lotteries ticket sales totalled £1.1 billion1.
New offerings in the lottery sector, such as the use of pre-paid gift cards as a payment method, present potential risks if appropriate know-your-customer measures are not implemented.
Risks
| Vulnerability | Risk | Likelihood of event occurring | Impact of event occurring | Overall risk | Change in risk |
|---|---|---|---|---|---|
| Operator Control | Operators failing to comply with prevention of money laundering and terrorist financing legislation and guidance | Low (1) | Medium (2) | Low (2) | Increase in impact | Operator Control | Lack of competence of key personnel and licence holders which can be exploited by criminals seeking to launder the proceeds of crime | Low (1) | Medium (2) | Low (2) | New risk | Operator Control | Inadequate know your customer (KYC) measures - including for customers who are not physically present | Low (1) | Low (1) | Low (1) | New wording | Operator Control | Training for staff is insufficient and is not appropriately tailored | Low (1) | Low (1) | Low (1) | New risk | Operator Control | Licensees failing to transfer lottery proceeds to charities | Low (1) | Medium (2) | Low (2) | No change | Operator Control | Inadequate due diligence checks on business-to-business relationships or business investors resulting in receipt of illicit funds | Low (1) | Medium (2) | Low (2) | Increase in impact (new wording) | Operator Control | Lack of closed-loop system | Low (1) | Medium (2) | Low (2) | New risk | Customer | False and stolen identity documentation | Low (1) | Low (1) | Low (1) | No change | Means of Payment | Cash transactions - this includes the risk of dyed and counterfeit notes (non-remote only) | Low (1) | Medium (2) | Low (2) | Increase in impact (new wording) | Means of Payment | Pre-paid entry, including gift cards, for example lottery subscription gift cards | Low (1) | Medium (2) | Low (2) | New risk | Product | Scratch cards or interactive instant win games | Low (1) | Low (1) | Low (1) | No change | Licensing and integrity | Scratch cards or interactive instant win games | Low (1) | Low (1) | Low (1) | No change (new wording) |
Commission-controlled risks
| Vulnerability | Risk | Likelihood of event occurring | Impact of event occurring | Overall risk | Change in risk |
|---|---|---|---|---|---|
| Licensing and integrity | Operator links to organised crime result in laundering of criminal funds | Low (1) | Low (1) | Low (1) | No change (new wording) |
Case study
Licensee failing to transfer lottery proceeds to charities
An external lottery manager (ELM) was convicted of misusing lottery proceeds. The Chief Executive Officer of the ELM used lottery proceeds to cover the costs of running the business and failed to pass on the proceeds to charities.
References
1 Industry Statistics - Annual report - Financial year April 2024 to March 2025 - Official statistics
2026 money laundering and risks - Arcades Next section
2026 money laundering and risks - National Lottery (remote and non-remote)
Last updated: 30 July 2026
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