External Lottery Managers (ELMs) - Lotteries
An ELM makes arrangements for a lottery on behalf of a society or local authority but is not a member, officer or employee of the society or local authority. A society or local authority and an ELM must be separate entities and be able to demonstrate that they are independent of each other.
Societies and local authorities can employ ELMs to manage all or part of their lotteries so that societies and local authorities may benefit from the experience or economies of scale that come with employing an ELM.
The purpose of society and local authority lotteries
The intention of the Gambling Act 2005 (the Act) is to allow non-commercial societies to use a lottery as a means of raising funds from the public for the cause promoted by the society or for the local authority for any purpose for which they have the power to incur expenditure.
The provisions are relatively limited in scope. It is not the intention of the Act to allow society or local authority lotteries to be promoted for private or commercial gain although it is accepted that an ELM is a commercial business that usually exists to produce a commercial profit.
ELM licensing requirements
An ELM must hold a lottery manager operating licence before they can promote a society or local authority lottery. The ELM (and the relevant society or local authority) will also need to hold a remote gambling licence if they intend to sell tickets by means of remote communication (eg internet, telephone).
It is the responsibility of both the society, or local authority, and the ELM to ensure that the other party holds the relevant operating licence before they enter into any arrangements regarding the promotion of lotteries.
Raising money for good causes
It is not the intention to allow society or local authority lotteries to be promoted for private or commercial gain although it is accepted that an ELM is a commercial business that usually exists to produce a commercial profit.
Each society or local authority lottery must return a minimum of 20% of the proceeds to the purposes of the society or local authority (the good cause).
They must provide consumers with information about the proportion of lottery proceeds (ticket sales) returned to good causes or for local authority expenditure, in a calendar year.
The fact that a society or local authority may employ a licensed ELM to manage all or part of its lottery does not absolve the society or local authority from its responsibility for ensuring that the lottery is conducted in such a way as to ensure that it is lawful and fully compliant with the Gambling Act 2005 (opens in a new tab), related regulations and all licence conditions and codes of practice.
Licence conditions and codes of practice relating to ELMs
All licensed ELMs are required to comply with specific conditions and codes of practice relevant to them. The specific licence conditions are set out at the time a licence is issued and are printed on the licence.
Information on proceeds and prizes to lottery players
Social responsibility codes attached to all lottery operating licences include a requirement to take account of the Commission’s guidance on providing information to lottery players about how proceeds are used and the likelihood of winning a prize and how those prizes are allocated. This information must be available prior to participating in a lottery.
Further information about these requirements can be found in the Commission’s guidance Information to lottery players: proceeds and prizes PDF needs turning into HTML.
Compliance and non-compliance - ELMs
We require all lottery operators to comply with the objectives of the Gambling Act 2005 (the Act) (opens in a new tab) and the licence conditions.
In circumstances where either a breach of the Act or the licence conditions occurs, we take this seriously and consider what criminal or regulatory action needs to be taken. This may include a review of the ELM’s operating licence, which could result in a formal warning, additional licence conditions, a financial penalty or suspension or revocation of the operating licence. Further details can be found in the Commission’s Licensing, compliance and enforcement policy statement.
In circumstances where the ELM is deemed to have committed a breach of the Act or the licence conditions, we may also consider acting against the society or societies whose lotteries they promote. This would be the case where the society was deemed to have failed in ensuring the lottery was conducted to be lawful and fully compliant with the Act, related regulations and all licence conditions and codes of practice.
In circumstances where an ELM has been deemed to have committed a breach of the Act or the licence conditions we may consider taking action against the society or societies they promote lotteries for. This would be the case where the society was deemed to have failed to ensure that the lottery was conducted in such a way as to ensure that it was lawful and fully compliant with the Act, related regulations and all Licence conditions and codes of practice.
Last updated: 1 November 2021
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