Gambling Commission Announces Society Lottery Reforms

United Kingdom

On 29 April 2020, the Gambling Commission announced that it would be making changes to annual limits and information requirements in respect of society lotteries. The changes follow two consultations; one led by the Commission and the other by the government.

The Commission licences almost 500 lotteries, which in the 12 months up to March 2019 raised £332 million for good causes. The changes, set out in more detail below, will take effect from 29 July 2020.

Raised annual limits

In July 2019, the government announced its plans to amend the Gambling Act 2005 to raise the per draw limit on ticket sales from £4 million to £5 million, meaning that the maximum individual prize would also increase from £400,000 to £500,000. The government also announced that the annual aggregate proceeds would rise from £10 million to £50 million.

As the Gambling Commission is required to attach conditions to lottery operating licences, it published a consultation proposing to amend licence condition 11 of the licence conditions and codes of practice (“LCCP”) to reflect the government’s changes.

Whilst most respondents to the consultation agreed with the proposed changes to the LCCP, some felt that the increases did not go far enough, and others said that the proposed increases to the proceeds limits would negatively impact the total fund available to the National Lottery good causes.

Following the responses, the Commission decided to amend the LCCP, pointing out that it was unable to put higher limits in place without further government intervention.

Information for consumers

The Commission also carried out its own broader review of society lotteries and was concerned about their lack of transparency. In particular, the Commission suggested that there was a lack of information about the odds of winning prizes and how much of the money raised went to good causes.

In its consultation, the Commission asked whether these concerns could be addressed with a new social responsibility code 4.3.3 and associated guidance. Whilst most respondents agreed that the new social responsibility code was a good idea, the majority did not agree with the wording the Commission had proposed. In particular, many respondents felt that the level of detail required would be too difficult to achieve.

In response to these concerns, the Commission explained that its proposed wording had perhaps been unclear and had caused respondents to believe that the information requirements were more onerous than the Commission had intended.

Therefore, the Commission announced that whilst it would add the new social responsibility code provision, the wording would be amended with the aim of making the expected outcomes clearer. The Commission also provided a guidance note on the requirements to clearly set out the level of information required.

The new guidance note summarises the minimum required information that licensees should provide to consumers in advance of a purchase, including in respect of prizes and how proceeds are used.

As a minimum, licensees must explain to consumers how winners are determined and how prizes are allocated, the potential prizes available, and the likelihood of winning a prize. In terms of proceeds, consumers must be able to understand how much is returned to the good causes and what those causes are, how much is spent on prizes and expenses, and whether the society lottery makes grants, including details of the grant-making process, if applicable.

Operators must take all reasonable steps to ensure that the information is understandable and presented through the most appropriate means of reaching the consumer. Given the information should be presented to consumers before they buy a ticket, the Commission advised that it may be wise to include the information in advertisements and promotions, as well as on the lottery website.

Comment

The changes around transparency requirements reflect the Commission’s strategic priority to protect the interests of consumers, and in particular, to ensure that consumers understand the products and services that they use.