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  3. Fourth National Lottery Licence: Regulatory Handbook

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Fourth National Lottery Licence: Regulatory Handbook

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

Published
1 February 2024

Last updated
1 February 2024 - Changes

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  1. Contents
  2. Volume two: Monitoring Performance Framework
  3. 18. Condition 28: Outstanding Liability Fund

18. Condition 28: Outstanding Liability Fund

18.1 This section provides guidance in relation to Condition 28, which requires the Licensee to establish and operate an Outstanding Liability Fund. This is to ensure that there are sufficient funds available to meet any fines and penalties - payable by the Licensee - which fall due after the End Date.

18.2 The condition sets out requirements on the Licensee in respect of the timescales for development, establishment and operation, and the amounts to be paid into the Outstanding Liability Fund. In summary:

  • the Licensee is required to propose a financial commitment mechanism that will provide protection (for example via escrow, or similarly ringfenced or secured capital) to cover these liabilities to our satisfaction by the start of Licence Year 6
  • the Licensee is only required to establish the Outstanding Liability Fund from the start of Licence Year 7 and until the second anniversary of the End Date (in a form and substance approved by us). Payments will be made to the Outstanding Liability Fund from the first month of Licence Year 7 until the final month of Licence Year 10 (or, if later, the final month of the Term, i.e. in the event of any Licence extension)
  • the Outstanding Liability Fund, proposed by the Licensee, must be in ‘cash form’ to cover the value of the Maximum OLF Amount.

18.3 Condition 28.6 specifies the Maximum OLF Amount as £10m, unless adjusted under Condition 28.7 to a greater sum, not exceeding £20m. We will make any decision to adjust in accordance with Condition 28.7 no later than the end of Licence Year 6. Condition 28.8 allows us to further review the amount paid into the Outstanding Liability Fund, to be concluded – and the Licensee notified – no later than the end of Licence Year 9.

18.4 Our approach to compliance with this condition will consider whether the Licensee’s obligations are met in respect of the establishment and operation of an Outstanding Liability Fund.

18.5 In terms of Conditions 28.7 and 28.8 (regarding any increase in the amount to be paid into the Outstanding Liability Fund), our approach will be informed by the Licensee’s conduct and any fines and penalties that have been levied on the Licensee. Where applicable, the fines and penalties may inform our consideration of any increase of the amount to be paid into the Outstanding Liability Fund (and its quantum).

18.6 We will also consider the Licensee’s broader conduct relative to requirements specified in Condition 1, and the nature of any breaches of the Fourth Licence by the Licensee. This will include consideration of the absolute obligations under the Fourth Licence, where the Licensee must do (or refrain from doing) a thing or must ensure an outcome, and other obligations, where the Licensee must do everything it can to ensure a specified outcome is achieved.

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17. Condition 27: Exit Next section
19. Schedule 5: Good Causes Contribution
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