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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. 7. General concepts used in the Fourth Licence and Section 6 Licences

7. General concepts used in the Fourth Licence and Section 6 Licences

7.1 This section provides guidance related to general concepts used within the Fourth Licence (also applicable to Section 6 Licences). We include further information about the following concepts:

  • absolute and other obligations
  • Matters to be Protected

Absolute and other obligations

7.2 The Fourth Licence includes a limited number of absolute obligations, as explained in Condition 1.3. This form of Licence obligation is used specifically in relation to matters that are under the control of the Licensee.

7.3 The Fourth Licence has several other obligations for the Licensee to "do everything it can" to achieve specified outcomes. Condition 1.4 clarifies that such requirements are breached unless the Licensee can satisfy us that it has taken all reasonable steps and exercised all due diligence to achieve the relevant outcome.

7.4 This type of obligation imposes strict liability for achieving an outcome, but allows the Licensee to demonstrate that it has taken all reasonable steps and exercised all due diligence in seeking to do so (a form of “due diligence defence”). Where “do everything it can” requirements are used, the Licensee would be unlikely to be in breach of the relevant Fourth Licence conditions as a result factors beyond its control. Similarly, “all reasonable steps” will not include steps which could only reasonably have been expected to be taken in hindsight, for example because relevant information was not available at an earlier point in time.

7.5 The relevant reasonable steps and due diligence will vary depending on the nature of the specific obligation and on the circumstances at any particular time. In the remainder of this volume, we provide a number of examples of the types of factors and evidence we may consider relevant when assessing compliance with different “do everything it can” obligations.

7.6 We consider that constructing certain conditions in the Fourth Licence as being “do everything it can” obligations rather than absolute obligations has two key benefits:

  • consistent with an outcomes-focused approach, it does not prescribe a specific way in which the Licensee must achieve the stated outcome, which provides Licensee flexibility to take its own decisions and is conducive to innovation for the benefit of Participants’ interests and Good Causes
  • it offers greater future-proofing from a regulatory perspective in a context where highly specific requirements may fail to provide for effective protection over time in dynamic environments (for example because they may become out of date in important respects)

7.6 Our regulatory approach (see volume one) assigns ownership of, and accountability for compliance to the Licensee, for both absolute obligations and “do everything it can” obligations. This is reflected in requirements for the Licensee to assure itself, and us, of its approach to achieving compliance and mitigating risk (see volume three). However, for the avoidance of doubt, we are ultimately responsible for determining – based on relevant evidence – whether a breach of a Fourth Licence condition has occurred, and for pursuing any enforcement steps in line with our Enforcement Policy (see volume four).

Matters to be Protected

7.7 Matters to be Protected are defined in the Fourth Licence in Condition 10.1. This concept encompasses a number of areas that are important for the long-term health of the National Lottery and for our ability to meet our statutory duties.

7.8 The concept of Matters to be Protected is used throughout the Fourth Licence and Section 6 Licences, including in relation to requirements for the Licensee to do everything it can to protect, or not damage, the Matters to be Protected.

7.9 When considering whether the Licensee has done everything it can to protect, or not damage, the Matters to be Protected, we will have regard to relevant factors depending on the circumstances and their potential implications for specific Matters to be Protected.

7.10 For example, with regard to Participant interests (which are covered by Matters to be Protected under Condition 10.1(a)) we will have regard to relevant outcomes as set out under Condition 8, for which further guidance is available in section 11 of this document. Similarly, with regard to the National Lottery Brand and reputation (which are covered by Matters to be Protected under Conditions 10.1(c) and (d)) we will have regard to relevant outcomes as set out under Condition 13, for which guidance is provided in section 14 of this document.

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6. Monitoring Performance Framework context
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8. Condition 1: Purpose and outcomes
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