Gambling Commission to consider the regulation of lottery-style betting products

This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.

The Culture, Media and Sport Committee last week published a report on society lotteries. Part of this report focused on a perceived blurring of the lines between betting and lottery products as a result of operators offering betting products, the results of which are determined by the outcomes of particular lotteries (with the exception of the National Lottery in relation to which bets cannot be taken). The Committee highlighted concerns that these products are creating confusion and diverting funds from good causes.

Such products are currently classified and regulated as betting products, which means that a wider range of operators are able to offer these products than would be able to do so were they to be categorised as lotteries. In addition, as betting products, they are subject to different regulatory requirements and, in particular, are not subject to a requirement that a proportion of proceeds be committed to good causes or restrictions on prize sizes.

In the course of the Committee's consultation three options were proposed by Camelot. These three options represent a wide spectrum of severity in their potential impact on those operators who currently operate these products - from requiring relatively minor changes to the way the products are presented and marketed to requiring operators to remove these products completely.

Option 1: Prohibiting all bets on lotteries either in betting shops or online.

The implementation of this option would have the greatest impact on operators who currently offer these products. It's not clear from the report whether the intention is to extend the prohibition on taking bets on the outcome of the National Lottery to all lotteries or just to UK licensed lotteries but in either case operators will be forced to withdraw products from the market as a result.

Option 2: Requiring relevant products to be clearly identified as betting products and not to suggest that they are lottery products

The Committee's report endorsed the current practice of many operators of taking steps to ensure that customers do not mistake betting products for lottery products. There is scope within this option to either introduce requirements for greater clarity in marketing and product descriptions or to go further and to prevent the use of the words 'lotto' or 'lottery' entirely in relation to such products. This 2 option is clearly the least restrictive for operators.

Option 3: Reclassifying bets on the outcome of lotteries as lottery products

There are fairly subtle differences between this option and option 1 and the ultimate result of the implementation of this option is likely to be the same - many operators will be forced to withdraw products from the market as lottery licences can only be granted to non-commercial societies, local authorities or external lottery managers acting on their behalf.

The Committee has charged the Gambling Commission with advising the Government on which of the three options would be the most effective in reducing consumer confusion and we would expect the Gambling Commission to offer an on opportunity for interested parties to submit their views prior to drawing a conclusion.