External Lottery Managers and service providers
Uncertainty can arise as to whether services provided to societies or local authorities amount to the promotion or facilitation of a lottery, in which case the provider needs an external lottery manager (ELM) licence if they are to avoid committing an offence, or instead amount to the provision of services which do not amount to promotion or facilitation, in which case no licence is needed. The following paragraphs give some guidance on the distinction. But anyone who is uncertain whether the services provided require the provider to hold an ELM licence should contact the Commission for advice.
Under section 252 of the Act (opens in a new tab), a person promotes a lottery if they make or participate in making the arrangements for a lottery. It says further that a person promotes a lottery in particular if they:
- make arrangements for the printing of tickets
- make arrangements for the printing, publication and distribution of promotional material
- make arrangements to advertise a lottery
- invite an individual to participate in a lottery
- sell or supply tickets
- offer to sell or supply tickets
- use premises for the purpose of allocating prizes or for any other purpose connected with the administration of a lottery.
Promotional material is defined as a document that advertises, invites participation, contains information about how to participate, or lists winners, in a particular lottery.
A person commits an offence under the Act if they carry out any of these activities on behalf of a society or local authority unless:
- they are an officer, employee or a member of a licensed or registered society or local authority
- they are a licensed ELM directed by a society or local authority to run all or part of its lottery.
Under section 259 of the Act (opens in a new tab), a person facilitates a lottery if they:
- print lottery tickets for a specified lottery
- print promotional material for a specified lottery
- advertise a specified lottery.
A person commits an offence of facilitating a society or local authority lottery unless they act in accordance with an operating licence.
Whether or not a person or body carrying out activities on behalf of a society or local authority requires licensing as an ELM will depend on the activities they conduct and whether they amount to either promoting or facilitating a lottery and, if so, the circumstances in which they carry out those activities. For instance companies which print tickets for or which advertise lotteries under direction from licensed or registered societies or licensed ELMs do not themselves require a licence because, although they are facilitating a lottery, they are acting in accordance with a licence held by someone else.
To take another example, direct mailing companies employed by society lotteries may be classed as either a service provider or ELM, depending on the functions they carry out. If their only role is to post tickets to people to participate in the lottery from a list provided by the society or ELM, the Commission does not think they are doing any of the things that fall into the definition above of promoting a lottery. However, where a person or body is responsible for and manages part or all of the lottery and decides issues such as where to target promotional material, sources people to enter the lottery and deals with ticket transactions, they are carrying out functions that are caught by the definition of promoting a lottery and require a licence.
The Commission considers that the Act provides a comprehensive definition of what amounts to promoting or facilitating a lottery for the purpose of determining whether an ELM licence is needed for people or bodies providing services to societies or local authorities. In cases where there is doubt whether or not a person or body is acting in the role of an ELM, the Commission will have regard to the overall management and degree of control of the lottery undertaken by the society and the other party in question. Where the person or body making any of the arrangements for a society or local authority lottery, for example, has control of how the lottery is promoted and managed, the Commission’s view is that they will be acting as an ELM and will need to hold the relevant operating licence issued by the Commission if they are to avoid committing an offence under the Act.
Key indicators the Commission uses in reaching a conclusion include:
- who decides how the lottery scheme will operate and when changes to the scheme should be made
- who controls the promotion, marketing and advertising of the lottery
- who sells the tickets
- who pays the prizes
- who appoints and manages sub-contractors
- banking arrangements and the process for handling the proceeds of the lottery
- the contractual agreements between the society and the other party.
External Lottery Managers (ELMs) Next page
Last updated: 27 July 2023
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