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The relationship between ELMs and society and local authority lotteries

As highlighted in section 257 (opens in new tab)the Act allows a society or local authority lottery to employ an ELM to manage all or part of its lottery on its behalf. The intention of these provisions is relatively limited in scope: they are designed to do nothing more than to allow a society to ‘outsource’ the running of a lottery to a third party.

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 Act, related regulations and all licence conditions and codes of practice.

Under section 252(4) of the Act (opens in new tab), where an ELM is employed to make the arrangements for all or part of the lottery including paying prizes and the expenses, the society or the local authority is equally responsible, with the ELM, for the lawful distribution of the proceeds.

This includes the mandatory requirement to return a minimum of 20% of the proceeds of any lottery promoted to the purposes for which the promoting society is conducted or the local authority has the power to incur expenditure (for further information, refer to the Commission’s advice note Lottery proceeds, April 2013.

If an ELM (or a service provider) is involved in the distribution of the proceeds, the Commission expects that they agree with the society or local authority in advance about how they will be distributed. This should include discussing and agreeing the prize structure, and ensuring that any expenses are reasonably incurred. If involved in the distribution of the profits of a lottery (that is, the proportion returned for the purposes of the society or local authority), this must be done in accordance with terms agreed with the society or local authority and in accordance with the society’s or local authority’s purpose. The society or local authority must always retain overall control of the distribution of profits.

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The licence conditions and codes of practice relating to ELMs

Last updated: 30 October 2024

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