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Lotteries and the Gambling Act 2005

Guidance on lotteries and the Gambling Act 2005 for local authorities

Published: 30 June 2021

Last updated: 11 October 2021

This version was printed or saved on: 13 June 2024

Online version: https://www.gamblingcommission.gov.uk/guidance/lotteries-and-the-gambling-act-2005


The Gambling Act 2005 (opens in new tab) provides that promoting or facilitating a lottery is illegal, unless it falls into one of two categories of permitted lottery, namely:

Definition of a lottery

For something to be a lottery, it must meet all the criteria in section 14 of the Gambling Act 2005 (opens in a new tab).

An arrangement is a simple lottery if:

An arrangement is a complex lottery if:

In practice, this means something is a lottery if people must pay for their chance to enter to win a prize, and the process for allocating those prizes is entirely chance based. If there is an element of skill involved, the process does not rely on chance and therefore is not a lottery ( section 14 (5) (opens in a new tab) of the Gambling Act 2005 and ‘When is a lottery not a lottery?’ for the criteria the skill question must meet).

The difference with a complex lottery is there may be several stages to the competition. However, if the first of those relies entirely on chance, the arrangement is a lottery. This would capture any competition where entrants pay to enter and names are then drawn, even if later stages of the competition require entrants to use skill to continue after the first stage.

Definition of ‘prize’

When considering whether something is a prize, section 14(4) says this includes any money, articles or services -

  1. whether or not described as a prize
  2. whether or not consisting wholly or partly of money paid, or articles or services provided, by the members of the class among whom the prize is allocated.

This means something does not cease to be a prize because, for example, it was paid for entirely by money raised from persons participating in the lottery, or because the person running the lottery chooses to call it something other than a prize. The inclusion of the term ‘service’ means things like getting a haircut, having a new loft installed, or receiving a course of guitar lessons, are also considered a prize.

Definition of ‘society’

A ‘society’ is the society, or any separate branch of such a society, on whose behalf a lottery is to be promoted. Section 19 of the Gambling Act 2005 (opens in a new tab) defines a society as such if it is established and conducted:

Application and Duration

Applications for a small society lottery registration must be made to the local authority whose area the principal office of the society is in.

Applications must be made in the prescribed form and accompanied by the prescribed fee.

Societies may not circumvent the requirement to hold a Gambling Commission Lottery Operating Licence by obtaining two or more registrations with the same or different Licensing Authorities.

Where a society has separate branches with different aims and objectives, it is acceptable for them to hold more than one licence or registration. However, in cases where a society holds more than one registration and the aims and objectives of those societies are the same, this may constitute a breach of the threshold limits for small society lotteries set out in Schedule 11 of the Act.

By virtue of Schedule 11 paragraph 31(5) of the Act, societies may not hold an Operating Licence with the Gambling Commission and a local authority registration with the same aims and objectives at the same time. This paragraph also provides for a statutory period of three calendar years during which a large society cannot convert to small society status (these years start from the year when the first lottery was promoted by that society).

Registrations run for an unlimited period unless the registration is cancelled or revoked.

Annual Fee

An annual fee of the prescribed amount must be paid to the Licensing Authority within the two months ending immediately before each anniversary of the registration.

Refusal of application

You must refuse an application for a small society lottery registration if:

Application Checks

When you receive a small society lottery registration, you should first check the Gambling Commission’s licensing register. This will tell you whether the Commission has revoked an Operating Licence for the society within the last five years. The Commission must be notified of every application for a small society registration and may contact you if we have refused an application from the society within the last five years.

You may refuse a small society registration if you think that:

You should check the application to see whether you are satisfied the society is a bona fide non-commercial society. This means the society must have been established for one of the purposes set out in the section called ‘Definition of Society’. The proceeds of any lottery must be devoted to those purposes. It is not permissible to establish a society whose sole purpose is to facilitate lotteries.

You may only refuse an application for registration after the society has had the opportunity to make representations. These can be taken at a formal hearing or via correspondence. You must inform the society why you are minded to refuse the registration and provide it with at least an outline of the evidence on which you have reached that preliminary conclusion, in order to enable representations to be made.

You must ensure you have set out a scheme of delegation for refusing small society lottery registrations.

It is suggested you set out the process and principles for refusing registrations in your Statement of Principles. This would include such matters as the time limit within which representations can be made, the matters you will consider, and who will consider the representations and make the decision.

Revocation of a small society’s registered status

You may revoke the registration of a society for the same reasons you would refuse an application. Again, you must inform the society of the reasons why you are minded to revoke the registration and provide them with the evidence on which you have reached that preliminary conclusion.

You must ensure you have set out a scheme of delegation for the revocation of small society lottery registrations.

It is suggested you set out the process and principles for revoking registrations in your Statement of Principles. This would include such matters as the time limit within which representations can be made, the matters you will consider, and who will consider the representations and make the decision.


You must inform the society of your decision to revoke their registration or refuse their application as soon as possible.

The society has a right of appeal to the Magistrates Court, which should be made within 21 days of the society being notified of the decision.


The society may request the registration is cancelled by putting their request to you in writing. You must, as soon as possible, confirm to the society that the registration is cancelled, and inform the Gambling Commission of the cancellation.

You may also cancel the small society registration if the society fails to pay the annual fee. You can do this by writing to the society to confirm the cancellation and notifying the Commission that you have cancelled the registration.

Lottery Tickets

Lotteries may involve the issuing of physical or virtual tickets to participants (a virtual ticket being non-physical, for example in the form of an email or text message). All tickets must state:

This information can be provided by giving the customer the opportunity to retain the message electronically or print it.

The society should maintain written records of any unsold and returned tickets for a period of one year from the date of the lottery draw. The Licensing Authority may wish to inspect the records of the lottery for any purpose related to the lottery.

Lottery Proceeds

The proceeds from each small society lottery cannot exceed £20K in a single draw, or £250K in a one-year period. If they exceed these amounts, the lottery is no longer a small society lottery, and the promoter must instead be licensed by the Gambling Commission.

The purpose of lottery returns

Local authorities should check the returns submitted by lottery promoters at least annually to ensure the £250K limit is not being exceeded. The returns for each draw should be checked to ensure they do not exceed £20K in proceeds.

Lottery Prizes

Prizes awarded in small society lotteries can be either cash or non-monetary. Prizes declared on returns must not exceed the limits on prizes set out by the Act. No single prize can be worth more than £25,000, even if the prize itself was donated.

At least 20% of the total proceeds from the lottery must go to the good cause. The remaining 80% can be used for expenses incurred with the running of the lottery, such as managers’ fees and prizes.

Donated prizes should be declared on the return following the lottery draw. The worth of the prize is its market value – not how much the promoter paid for it.

Administration and returns

The Act requires that a minimum proportion of the money raised by the lottery is channelled to the goals of the society that promoted the lottery. If a small society lottery does not comply with these limits, it will be in breach of the Act’s provisions, and consequently be liable to prosecution.

Lottery limits

The limits are as follows:

  • at least 20% of the lottery proceeds must be applied to the purposes of the society (Schedule 11, paragraph 33);
  • no single prize may be worth more than £25,000 (Schedule 11, paragraph 34);
  • rollovers between lotteries are only permitted where every lottery affected is also a small society lottery promoted by the same society, and the maximum single prize is £25,000 (Schedule 11, paragraph 35);
  • every ticket in the lottery must cost the same and the society must take payment for the ticket fee before entry into the draw is allowed (Schedule 11, paragraph 37).

Paragraph 39 of Schedule 11 GA05 sets out the information the promoting society must send as returns to the Licensing Authority with which it is registered. This information must be sent within three months of the conclusion of each draw. This information allows Licensing Authorities to assess whether financial limits are being adhered to and to ensure that any money raised is applied for the proper purpose. The following information must be submitted:

Paragraph 39 of Schedule 11 in the Act also requires that returns must:

The Gambling Commission may inspect a society’s returns, although we will not routinely do so. The Licensing Authority is required to retain returns for a minimum period of 18 months.

You must notify the Commission if returns reveal that a society’s lotteries have exceeded the values permissible, and such notifications will be copied to the society in question. The Gambling Commission will contact the society to determine if they are going to apply for a lottery operator’s licence, thereby enabling them to run large society lotteries lawfully, and will inform the Licensing Authority of the outcome of its exchanges with the society.

If a small society lottery fails to submit returns as specified in section 39 of Schedule 11 to the Gambling Act 2005, they commit a criminal offence under section 262 of the Act.

Lottery register

You must keep a register of every society lottery you have registered.

You must also lottery returns available for inspection by the public for a minimum period of 18 months following the date of the lottery draw. These should be available for inspection by the public at any reasonable time. It is recommended that you set out how the public can view these in your Statement of Principles for Gambling or on your website.

You must also provide the facility for members of the public to obtain a copy of these returns, or any part of them.

You are permitted to charge a reasonable fee for the public to view or to take copies of this information. This fee should be no more than the reasonable cost of providing the service.

Types of lottery that do not require a registration or licence (exempt lotteries)

Customer Lottery

A customer lottery is a lottery held by a business for its customer. This type of lottery cannot make a profit. A customer lottery is only exempt from regulation if the following conditions are met:

This does not prohibit AGC’s for example from providing free draws to their customers. These are not lotteries because there is no requirement to pay to enter.

Incidental Lottery

An incidental lottery is one that is held at an event, such as a charity dinner, festival, or fete. The event itself can be commercial or non-commercial. No licence or registration is required to hold a lottery at such events provided the following conditions are met:

Private Lotteries

There are three types of private lottery. These are work lotteries, residents’ lotteries, and private society lotteries.

In each of these cases, tickets may not be sold to the public. They can only be sold to:

Work lotteries and residents’ lotteries can only be promoted to raise funds for a charity or good cause OR in a way that ensures no profit is made (i.e. all the income is devoted to prizes and expenses). Private society lotteries can be promoted to raise funds for charity or a good cause OR for the purposes of the society.

Rollovers are not permitted in any type of private lottery.

When is a lottery not a lottery?

A draw is not a lottery if:

It is a free draw. In a free draw, a free entry route is offered either in its entirety, or in addition to a paid route. However, there are conditions about offering a free entry route. These are:

It is a prize competition. A prize competition is where an element of skill is required for persons to be able to participate. However, for the skill test to apply, a significant proportion of people should be unable to enter because they did not have sufficient skill or knowledge to meet the challenge of entering.

Common Problems

It is not necessarily illegal to offer a raffle or draw on Facebook or on a website without a licence. If the person offering the draw has met the requirements for a free raffle or a prize competition or holds a Small Society Lottery registration, then no licence from the Gambling Commission is required. If they have not, you should refer the lottery to the Gambling Commission by emailing the details to intelligencereports@gamblingcommission.gov.uk