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Policy

Fourth National Lottery Licence: Regulatory Handbook

The Commission’s regulatory handbook sets out our regulatory approach to the National Lottery.

  1. Contents
  2. Volume two: Monitoring Performance Framework
  3. 15. Condition 17: Licensee and its operations to be Fit for Purpose

15. Condition 17: Licensee and its operations to be Fit for Purpose

15.1 This section provides guidance related to the provisions and requirements set out in Condition 17, which concerns the Licensee and its operations being Fit for Purpose. Condition 17 specifies some of the ways in which the Licensee must do this, and we address each area of this condition: Licensee Assets and consumables; Technology Operation; and the Independent Verification System.

15.2 At a general level, when considering compliance with Condition 17 we may have regard to the Licensee’s organisational approach to ensuring that the operation of the National Lottery meets the Fit for Purpose Requirements (including through developing a Technology and Data Architecture Strategy and a security strategy, in accordance with Condition 17.5), as well as how it evaluates its approach and implementation.

15.3 Where the Licensee’s Application included specific proposals in relation to the implementation of its Technology and Data Architecture Strategy and its security strategy, as well as its operating model in general, we may take account of any failure by the Licensee to implement those proposals in full, in assessing whether the Licensee has fulfilled the requirements of Condition 17.1. At the same time, we recognise that the Licensee’s approach may reasonably change over time in order to meet the outcomes set out in the Fourth Licence.

15.4 Therefore, we may also consider if and how the Licensee's approach has developed over time, including in response to:

  • a range of evidence on the effectiveness of its operating model, Technology and Data Architecture Strategy and security strategy
  • market, legal, regulatory or technological developments relevant to the operation of the National Lottery
  • relevant changes in circumstances that might affect the Licensee’s ability to ensure that the National Lottery operation is Fit for Purpose.

15.5 In any assessment of compliance, we will have regard to evidence of Best Practice related to technology operations and their security, and on independent verification systems, including from any relevant government departments and agencies, and standards bodies (for example ISO – International Standards Organisation, WLA – World Lottery Association, PCI Security Standards Council).

15.6 As with other areas of Licensee compliance, we will have regard to information received through Licensee assurance and reporting when monitoring and assessing compliance risk. In particular, the performance standards report (see Assurance and Regulatory Reporting requirements, Table 3) is expected to cover a range of operational and technology metrics, including with respect to the Independent Verification System (IVS).

15.7 In relation to compliance with Condition 17.2 (Licensee Assets and consumables), we expect to consider the ongoing condition of Licensee Assets and maintenance arrangements in support of the (good) condition of assets. At all times, we require Licensee Assets to be in good condition, and that suitable and appropriate security and support is maintained in respect of Licensee Assets and Lottery Data.

15.8 Condition 17.2 also requires the Licensee to ensure, where Lottery Assets are consumables, there are sufficient levels of stock to support Fit for Purpose operation. To facilitate continuity, Lottery Assets – other than consumables – are required to have a “minimum life” of 2 years beyond the Term of the Fourth Licence.

15.9 The Technology Operation will be key to a Fit for Purpose operation, and we would expect to consider a broad range of information and evidence related to compliance with Conditions 17.4 to 17.6. For example, in respect of factors listed in 17.4(a), and other provisions in Condition 17, where the Licensee must do everything it can to ensure that the Technology Operation has the necessary capacity, performance, availability, scalability, resilience.

15.10 Our approach to assessing compliance with respect to Condition 17.7, regarding the IVS, will be informed by the Licensee’s approach in its establishment, maintenance and operation of the IVS, but also by the information and deliverables from the IVS. While the precise nature of reports, data and other information required from the IVS will be determined and agreed during Implementation prior to the start of the Fourth Licence (and contained in the performance standards report), we expect the IVS to have the necessary ability to perform end-of-day auto balancing between gaming systems (and the IVS).

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14. Condition 13: The National Lottery Brand and reputation
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16. Condition 18: Financial and Operational Resilience
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