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Proceeds and profits - ELMs

Section 254 of the Act (opens in new tab) clarifies what is meant by ‘proceeds’ and ‘profits’ of a lottery. It defines proceeds as ‘the aggregate of amounts paid in respect of the purchase of lottery tickets’. This means that proceeds are the total amount paid for tickets before any deductions.

Profits are defined as the amount of proceeds less any deductions for prizes, rollovers and reasonable expenses incurred in connection with running the lottery.

Section 99(2) of the Act (opens in new tab) of the Act specifies the way in which the proceeds of a lottery must be distributed, as follows: ‘The first requirement is that at least 20% of the proceeds of any lottery promoted in reliance on the licence are applied:
a) in the case of a licence issued to a non-commercial society, to a purpose for which the promoting society is conducted
b) in the case of a licence issued to a local authority, for a purpose for which the authority has power to incur expenditure’.

In addition to profits the proceeds can only be used to:

  • provide prizes
  • pay expenses ‘reasonably incurred’ organising the lottery.

Further information regarding lottery proceeds can be found in the Commission’s advice note Lottery proceeds, April 2013.

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