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The purpose of society and local authority lotteries

The intention of 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 to raise funds 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.

The proportion of the proceeds of a lottery that are distributed for the purposes of the society or local authority are called the ‘profits’ (see section 7 - Proceeds and profits, and the Commission’s advice note Lottery proceeds, April 2013 for further information. Each society or local authority lottery must return a minimum of 20% of the proceeds to the purposes of the society or local authority.

Under section 260 of the Act (opens in new tab) it is an offence to use any part of the ‘profits’ of a lottery for a purpose other than that stated by the society or in the promotional material. Section 261 (opens in new tab) applies the same offence to small society lotteries.

Under section 254 of the Act (opens in new tab), alongside the profits, the proceeds of a lottery will be split between the payment of prizes and paying reasonable expenses. The expenses can include a payment to an ELM in respect of the services provided in respect of promotion of the lottery. However, that payment must be proportionate and reflect the lawful status of the lottery as a means of raising funds to support a non-commercial society or local authority. The promoting society or local authority must ensure any fees paid to an ELM constitute an expense reasonably incurred organising the lottery.

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The relationship between ELMs and society and local authority lotteries

Last updated: 17 October 2024

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