Society lotteries at the centre of Gambling Commission's LCCP revisions

United Kingdom

The Gambling Commission recently published a new version of its ‘Licence Conditions and Codes of Practice’ (LCCP). Many of the revisions to the LCCP relate to the regulation of society lotteries, for whom the Commission has also recently warned of the pitfalls of exaggerating likely winnings in adverts. The Commission has also published a new enforcement strategy for the National Lottery, bringing it in line with its overall enforcement strategy.

Publication of new LCCP

The new version of the LCCP will be in force from 4 April 2018. In general the amendments are reasonably minor, although society lottery operators will now have to:

  • publish what proportion of money raised from lottery ticket sales in the previous year was returned directly for the purposes of the society; and
  • make it clear to consumers before they buy a lottery ticket exactly which society or charity the lottery proceeds are going to.

These requirements are introduced by the new social responsibility code provisions 4.3.1 and 4.3.2 respectively. Such changes are being implemented as a result of the Commission’s consultation on society lotteries run last year - the results of which can be found here. In its response document the Commission stated that “the amendments are being made to further ensure gambling is offered in a fair and open manner and reflect the commitment made in the Commission's Corporate Strategy to improve transparency to consumers across the whole gambling industry”.

The revised LCCP also includes amendments to licence condition 15.2.2 to broaden operators’ reporting requirements in respect of overseas revenue. Such changes are a result of the Commission’s consultation on regulatory data that was run in 2017. Our summary of the results of the consultation can be found here.

Currently, all licensees are required to notify the Commission upon becoming aware that a group company which is not a Commission licensee is advertising remote gambling facilities to those residing in a jurisdiction in or to which it has not previously advertised. In addition to this, upon applying for an operating licence, B2C businesses must also disclose any market from which they derive 3% or more of their total revenue from players, or in the case of businesses with a total revenue of less than £5m per annum, markets which they are targeting where the revenue is more than 10% of their total revenue. Under the new LCCP requirement, operators will now have to report where there has been sustained/meaningful generation of the 3% / 10% threshold being passed for the wider group.

The Commission has also introduced a requirement - alongside the obligation to provide information on suspicious activity reports – to report where the customer relationship has been discontinued, as well as when a gaming system fault has resulted in under or overpayments to a player. Having removed both requirements from its regulatory returns, both are now included as key events at licence conditions 15.2.1(14) and (25b) respectively

A summary of the key changes to the LCCP can be found here.

Misleading Lottery advertising

The Commission has also reminded all lottery operators of their obligations under the CAP and BCAP Codes – and the terms of their licence - to ensure that their advertising is not misleading. In particular the Commission has warned that where information about the prizes available are published, the operator must make sure this is done in a “clear, transparent and unambiguous way” (including by not exaggerating likely winnings) so that consumers will understand the prizes offered.

The Commission’s guidance comes in the wake of the Advertising Standards Authority’s (ASA) ruling against the Health Lottery. The regulator found that a Facebook post advertised an unrealistic cash prize and was therefore misleading, in breach of rules 3.1 (Misleading advertising), 3.7 (Substantiation) and 3.9 (Qualification) of the CAP Code. For Law-Now’s summary of the ruling see here.

Changes to National Lottery enforcement strategy

The Commission has published a revised version of its ‘Enforcement policy in relation to the National Lottery’, harmonising it with changes made to its overall enforcement strategy last year, as we reported here.

The consultation on the overall strategy had focused solely on its enforcement under the Gambling Act 2005, not its enforcement work under the National Lotteries etc. Act 1993. A consultation was, however, run from 11 October 2017 to 21 November 2017 on the latter, and the Commission has now published the results along with the revised policy. The changes include (amongst other things):

  • an updated set of general principles;
  • a clearer distinction between the Gambling Commission’s investigative work and its decision making;
  • the removal of the requirement for decision makers to rank the overall regulatory significance of a breach as low, medium or high; and
  • more information about how decisions of the Commission will be published.

The revised policy not only intends to harmonise the Commission’s approach, but to also “streamline the process and policies governing National Lottery enforcement”.