Lotteries and the Law

The Gambling Commission has produced a document called "Lotteries and the Law" to assist Societies in the interpretation and adherence to the 2005 Gambling Act.

An extract is provide below as an introduction

Here is a link to the full Lotteries and the Law PDF document.

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Lotteries and the Law (Gambling Act 2005)

Advice for society and local authority lotteries, May 2007

1. Introduction

1.1	This advice provides a general guide to the main principles and requirements of lotteries law as contained in the Gambling Act 2005 which repeals the Lotteries and Amusements Act 1976. It is primarily intended as advice for large society and local authority lotteries promoted under licence from the Gambling Commission ("the Commission").
1.2	The advice is not comprehensive or a binding interpretation of the law and anyone intending to run a lottery should refer to the Gambling Act 2005 ("the Act") and if necessary seek independent legal advice to ensure that they conform to the law before proceeding. Separate advice has been issued to local authorities in respect of small society lotteries under their jurisdiction.
1.3	The Act introduces a new regulator for all gambling (except the National Lottery and spread betting) in Great Britain, the Gambling Commission. It also introduces a new licensing regime for society and local authority lotteries and a registration system for small society lotteries.
1.4	The Act creates two broad classes of lottery; first large society lotteries and lotteries run for the benefit of local authorities which will be licensed by the Gambling Commission, and secondly exempt lotteries, including small society lotteries which will be registered with licensing authorities (local authorities).
1.5	The Commission does not regulate the National Lottery, which continues to be regulated by the National Lottery Commission under separate legislation.
1.6	The Act has three licensing objectives which underpin the functions that the Commission and licensing authorities will perform. These objectives are central to the new regulatory regime created by the Act. They are: preventing gambling from being a source of crime or disorder, being associated with crime or disorder, or being used to support crime; ensuring that gambling is conducted in a fair and open way; and protecting children and other vulnerable people from being harmed or exploited by gambling.
1.7	The Gambling Act 2005 allows for a general relaxation of lottery law, in particular it: relaxes the limits on the percentage of proceeds that may be applied to expenses or prizes; allows rollovers of the prize fund from one lottery to another; allows for the sale of tickets by an automated process; and removes the maximum price for a lottery ticket.

2. Definition of a lottery

2.1	An arrangement is a simple lottery if: persons are required to pay to participate in the arrangement; in the course of the arrangement one or more prizes are allocated to one or more members of a class; and the prizes are allocated by a process which relies wholly on chance.
2.2	An arrangement is a complex lottery if: persons are required to pay to participate in the arrangement; in the course of the arrangement one or more prizes are allocated to one or more members of a class; the prizes are allocated by a series of processes; and the first of those processes relies wholly on chance.
2.3	By virtue of section 14(5) of the Act, for the purpose of these definitions a process which requires persons to exercise skill or judgment or display knowledge is to be treated as relying wholly on chance if: the requirement cannot reasonably be expected to prevent a significant proportion of persons who participate in the arrangement from receiving a prize; and it cannot reasonably be expected to prevent a significant proportion of persons who wish to participate in the arrangement from doing so.

3. Types of lotteries

Society lotteries

3.1

Society lotteries are lotteries promoted for the benefit of a non-commercial society. A society is non-commercial if it is established and conducted: for charitable purposes; for the purpose of enabling participation in, or of supporting, sport, athletics or a cultural activity, or for any other non-commercial purpose other than that of private gain.

Local authority lotteries

3.2	A local authority may use the net proceeds of its lottery for any purpose for which it has power to incur expenditure.

Exempt lotteries

3.3

Exempt lotteries do not require a licence from the Gambling Commission, although small society lotteries are required to register with their local authority. In addition to small society lotteries, exempt lotteries include: incidental non-commercial lotteries – commonly held at charity fund raising events; private society lotteries – only members of the society and those on society premises can participate in the lottery; work lotteries – only people who work together on the same premises may participate; residents’ lotteries – only people who live at the same premises may participate; and customer lotteries – only customers at the business premises may participate.

The National Lottery

3.4	The National Lottery, currently operated by Camelot, will continue to be regulated by the National Lottery Commission. Lotteries that are regulated by the National Lottery Commission will not require a Gambling Commission licence or registration with the licensing authority.