Gambling and Lotteries

Lotteries are one of the most popular types of gambling in the UK.  Any type of competition or prize draw scheme will be classed as a lottery if it has the following characteristics:

• Players have to pay in order to take part
• One or more prizes is allocated to one or more players
• Prizes are allocated by a process which relies wholly on chance (or if there is more than one round to select a winner, the first round relies wholly on chance).

A number of types of competitions could fall within the definition of a lottery, including raffles, tombola, sweepstakes, 100/500 clubs, and prize draws.  Any such promotions must comply with the requirements of a category of lottery, as set out below.  In some cases, this will require the promoter to register with us, or obtain a licence from the Gambling Commission.

Small Society Lotteries

Charities, sports clubs and other non-commercial organisations wishing to run small lotteries to raise funds for their activities will need to register with us.  Small society lotteries can be used to raise up to £250,000 per calendar year, with a limit on the proceeds from each individual lottery of £20,000.

Non-commercial societies wishing to promote mall lotteries, raffles, prize draws or similar, in order to raise funds for a purpose of the society, must be registered with us.  Societies can request registration by completing a Small Society Lottery registration application.  The initial registration fee is £40, with an annual fee of £20 payable in each subsequent year until the registration is surrendered or revoked.

A registration will be cancelled if payment of the annual fee is not received by the anniversary of your first registration, which would mean that you would have to apply for a new registration.

Restrictions on Small Society Lotteries

To be classified as a ‘small’ lottery, each individual promotion must meet the following requirements:

• Proceeds from a single lottery must not exceed £20,000
• Aggregate proceeds of lotteries promoted in a calendar year must not exceed £250,000
• at least 20% of the proceeds of every lottery must be used for a purpose for which the promoting society is established and conducted

Prizes

The maximum value of any prize fund allowed in a small society lottery is £25,000.  This limit applies to both cash prizes and the value of any goods or services offered as a prize.  Unclaimed prizes can be ‘rolled over’ into future lotteries run by the same society, providing that the £25,000 prize limit is not breached.

Tickets

Every ticket sold in a lottery must be the same price, and the buyer must be given a document that identifies the promoting society, the price of the ticket, the name and address of a person responsible for the lottery and the draw date(s).

Lottery tickets may only be sold by persons over the age of 16, to persons over the age of 16.

Return of Lottery Details

After promoting a lottery, the registered society must return details of that lottery to us within three (3) months of the date of the draw (or last draw).  The details required include:

• Details of the arrangements for the lottery including the date(s) on which tickets were sold, the dates of any draw(s) and the arrangements for prizes (including any rollover)
• The proceeds of the lottery
• The amounts deducted in respect of the provision of prizes
• The amounts deducted in respect of other costs incurred in organising the lottery
• Any amount applied to a purpose for which the promoting society is conducted
• Details of any expenses that were paid for other than by deduction from the proceeds.

A Lottery return form is to be used to submit the above information within the three (3) months timeframe.  Every completed returns form must be signed by two (2) directors, trustees or members who have been nominated by the society.  A written document confirming their nomination (Form – Appointment of Certifying Members) should be supplied with the return.

National Lottery

The National Lottery is the largest lottery scheme in the UK.  The operator is licensed and regulated by the Gambling Commission who ensure that its competitions are run in accordance with the licence terms and conditions and the relevant legal requirements.

Large Society Lotteries

Any lottery with proceeds of more than £20,000, or multiple lotteries run by a society with total proceeds of more than £250,000 in a calendar year, will be classed as large society lotteries.

We are obliged to notify the Gambling Commission of any such lotteries carried out by societies registered with us, and all subsequent lotteries run by the society in the following three years will need to be licensed under an operating licence.  Please see the Gambling Commission’s website for further details about lottery operating licences.

Incidental Lotteries

Incidental lotteries held entirely at events (such as where tickets are only sold at and during the event), where all the money raised from the lottery goes to purposed that are not for private or commercial gain, do not need to be registered or licensed, as long as they comply with certain statutory criteria.

Private Lotteries

Private society, work or residents’ lotteries are those where tickets are only sold to society members, workers in or residents of a premises.  For example, a weekly raffle where tickets are sold only o the residents of a residential care home, or an office sweepstake.

Customer Lotteries

Customer lotteries are those run by occupiers of business premises selling tickets only to customers on the premises itself.

Skill Competitions and Free Prize Draws

Most skill competitions will not be classed as lotteries, as they will not rely wholly on a process of chance to select the winner.  The test that has to be applied is whether the competition (which may either rely on a test of skill, such as sporting ability) is sufficiently difficult to eliminate a significant proportion of the players.

Similarly, free prize draws, which do not require payment of an entry fee, are not considered as lotteries.