Policy

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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Contents
Volume one: Regulatory Approach
4. Our development of the Fourth Licence approach

4. Our development of the Fourth Licence approach

4.1: In developing our Fourth Licence regulatory approach we reviewed lessons learned from previous National Lottery regulation as well as reviewing guidance from Government on regulatory best practice.

4.2: The Cabinet Office led one of the most comprehensive reviews of regulatory practice since the Hampton Report in 2005. The resulting report in 2017, Regulatory Futures Review (opens in new tab), recommends that regulators adopt an outcomes-focused approach where possible.

Regulatory Futures Review. Government setting high-level principles: outcome-based regulation, Cabinet Office, January 2017. See extracts:

In principle, good public policy prefers a focus on outcomes to a focus on outputs, processes or inputs. Outcome-based regulation can be flexible to technological and market changes including reduced barriers to new entrants - important in fast changing industries, where implementation of detailed regulations can have the effect of suppressing innovation. It can also reduce the resources required by the regulator for inspections/investigations which were confirmed by the Review information collection exercise to be the most significant area of current regulator activity.

(P.29)

We recommend that regulators should move as far as practicable towards an outcome-based approach, with appropriate safeguards to ensure that new and small firms do not suffer as a result. Regulators should also consider how such a change should affect the nature of their engagement with regulated companies.

(P.32)

4.3: The National Audit Office (NAO) also focuses on the importance of having an outcomes-focused approach embedded in UK regulatory best practice³. In 2019, it published a review of regulation across different sectors⁴ focusing on the impact of an outcomes-focused regulatory approach.

4.4: We also reviewed lessons learned from our Third Licence National Lottery regulation experience and investigations from the NAO and Public Accounts Committee (PAC)^5,⁶. These lessons focused on aligning Licensee profits with Good Causes and highlighted the need to increase Licensee accountability.

4.5: We developed our Fourth Licence approach in the context of our corporate strategy (2018 to 2021)^7,. Our aims are to be a risk-based, evidence-led and outcomes-focused regulator.

4.6: To reflect the changing environment in which the Licensee operates, the Fourth Licence takes account of that fact that the Licensee may often procure goods and services through Lottery Subcontracts rather than owning and maintaining Lottery Assets, including Lottery IP, outright. This is reflected, among other things, in our approach to a successful Exit from the Fourth Licence, where we expect that access to many Lottery Assets, including IP, will be transferred through the novation of Lottery Subcontracts rather than through the transfer of Lottery Assets.

4.7: After reviewing all the evidence and potential benefits we therefore developed a more outcomes-focused regulatory approach for the Fourth Licence. We explain and illustrate this further in section 5.