Achieving regulatory compliance in lottery operations
Howard Lake | 14 June 2016 | Blogs
Anyone who has ever ventured near the task of fundraising with a lottery will be more than aware of the frightening degree of complexity that the law applies to this process.
This has become if anything, more difficult since the Gambling Act of 2005 came into force, when lotteries were swept into the realm of “gambling”, like it or not and to a large extent governed by the same or similar regulations which apply to casinos and betting shops.
Larger lotteries (£20,000 ticket sales per draw or £250,000 for a full year) require a licence from the Gambling Commission, which unlike the old Gaming Board has a very pro-active role in holding licensees to account in respect of the three principles of the Gambling Act: Protecting the young & vulnerable; keeping gambling crime-free and ensuring fairness. In practice this means that licence holders are subject to potential sanctions for infringements of the licence codes and conditions, including licence suspension, revocation and fines. Not to mention the adverse reputational impact which any of those penalties would entail.
Lotteries for non-commercial purposes
One of the major considerations which give most cause for concern is the requirement to achieve a minimum 20% return to the good cause. This stipulation arises from the essence that lotteries must be established for non-commercial purposes, that is to say not for personal or commercial gain.
Though many lotteries easily surpass this level (the average is 42%) and some achieve over 70%, for new programmes with few previous lottery supporters, it can be a serious challenge. The threshold figure also has to be attained purely from ticket sales value too; incidental donations do not count.
Planning and budgeting
Coping with this means dealing yourself a good hand at the start. Any lottery needs planning in advance (and indeed you need to set out your plans and budget for approval from the Gambling Commission before anything is committed) and this includes thinking about costs and objectives.
Don’t fall into the common trap of chucking every conceivable expense into your lottery: staff who work on fundraising, but not in the lottery project are not a valid cost for example. Similarly if you are mailing tickets, think about what other material is in the pack. If it doesn’t directly relate to lottery ticket sales the cost should be excluded from the return calculation.
Going back to those gambling act principles; you need to think carefully about how you’re going to achieve compliance. That means setting out detailed policies, reviewing them regularly (at least once a year) and evidencing the same with dates and version numbers. Remember too that staff need to be trained in the policies which you’ve created, with evidence of the process. Stay compliant and raise funds!
Image: Lottery balls – 3dfoto on Shutterstock.com
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About Howard Lake
Howard Lake is consultant editor of UK Fundraising. He founded the site in 1994 and successfully sold it in 2022. As director of Giving X Ltd he is exploring growing giving on a massive scale.
He is the founder of Fundraising Camp and co-founder of GoodJobs.