If you run a Gambling Commission-licensed society lottery check out this quick guide to making sure you are on the right track…
The lottery sector is very different from other gambling sectors like betting or bingo.
Lotteries can only be held for good causes and are a popular fundraising tool for many charities large and small, from big national charities who are household names right through to smaller local organisations such as hospices.
And for most the lottery is just one of many ways you are working hard to raise funds for your good cause.
So it’s no surprise that our compliance managers frequently come across a few lottery compliance gaffs that are putting fundraisers at risk of breaking the law.
We want to help you make sure your lottery is compliant so that you can get on with the job of raising lots of money for your charity without having to worry that you’re going to get into trouble!
We’ve pulled together the top five most common areas of confusion our compliance managers see when they are carrying out licensed society lottery inspections.
1. Proceeds, prizes and rollovers – know the limits
For society lotteries a minimum of 20% of the proceeds of each lottery must go to your good cause – you can give more – and many of our society lotteries do.
Up to a maximum of 80% of the proceeds can be divided between prizes and the expenses of running the lottery.
The maximum single prize you can offer is £25,000 or 10% of the proceeds (gross ticket sales), whichever is greater.
Therefore, if you sold the maximum number of tickets in a single large (category C1) lottery (£4 million) you could award a maximum top prize of £400,000.
Rollovers are permitted provided that maximum single prize limit of 10% of the proceeds (or £25,000) is not breached.
If you hold a non-remote lottery licence and an ancillary remote licence you must ensure that remote sales, such as those over the internet or by telephone, account for no more than £250,000 proceeds (ticket sales).
2. What is the value of your prize?
Where the prize in your lottery is not cash it can be harder to determine the value and be sure that you are keeping within the maximum prize limits.
Even if the prize has been donated, by a local business for example, the value is still the market value of the item – not the amount you had to pay to get it.
3. Submit the data from your lottery
You need to report to the Gambling Commission detailed information about your lottery.
These are called lottery submissions, and one must be made for each lottery you run. Those of you who have run lotteries for a while might remember these being called lottery returns.
Each lottery submission must detail:
- total proceeds broken down between remote and non-remote sales
- cost of a ticket
- amount applied directly to your good cause
- amount distributed between expenses and prizes (including amount deducted for rollover to a future lottery)
- amount of prizes paid out in a rollover.
You must get your lottery submissions to the Gambling Commission within three months of the date of the lottery draw. In the case of an ‘instant’ (scratchcard) lottery, this should be within three months of the last date on which tickets in the lottery were put on sale.
So if the end date of your scratchcard lottery is 31 December 2016, you need to have made the lottery submission by 31 March 2017.
You must make your lottery submission using our e-services facility. Guidance on how to complete your lottery submission is available throughout the online system. Sign up to our online system.
Later this year you will also be asked to provide more information on the market value of the top prize, what type of lottery it is – a raffle, subscription lottery, scratchcard etc, as well as if the lottery uses a common branded scheme to sell tickets.
4. Know what your agents are up to
Many lottery organisers use third parties or agents to sell tickets. However, as the licence holder, you are ultimately responsible for their actions when they are promoting your lottery so it is really important you know what they are up to.
Can you be confident they are checking for underage sales? Do you know where they are selling your tickets? Are you sure they are being clear to customers about where their money is going and the terms and conditions of your lottery? Are they sourcing their marketing database responsibly?
One of the conditions of a lottery is that the promoter must have been paid before the entry is valid. Are your agents submitting the full amount taken for lottery entries?
5. Manage your direct debit and standing order payments
Does your management system for direct debit/standing order payments provide alerts for when expected payments have not been received or where the payment made is incorrect?
Because the payment has to have been made before an entry can be included in a draw it is important that errors or delays for direct debits/standing orders are flagged straight away.
Should a regular payment system be used (for example, weekly lottery by direct debit) you must be able to identify when payments have not been made so that the entry record can be adjusted accordingly. You should also be able to identify all payments made by direct debit or standing order, so you are sure that the people who have paid to enter are actually included in the draw.
This includes any overpayments you might receive. Where it is clear that the payment is intended to purchase chances in a draw any overpayment must be returned to the payee or clearly marked as customer funds to use against a future lottery (you also need to tell players if you protect any money you hold on account for them). Otherwise it could be considered misuse of lottery proceeds, which is an offence.