Small Society Lotteries

The Gambling Act 2005 authorises the conduct of small lotteries by societies, to raise money for charitable, sporting and other similar causes, otherwise than for private gain. The Society must first be registered with the Council in whose area their principle office is located and the lottery must be conducted in a manner complying with the Act. In order to register, the society must submit an application to the Council, using the prescribed application form.

The Act requires that a minimum proportion of the money raised by the lottery is applied to the goals of the society that promoted the lottery. If a small society lottery breaches these limits it will be in breach of the Act and will be liable to prosecution.

The limits placed on small society lotteries are as follows:

1. At least 20% of the lottery proceeds must be applied to the purposes of the society.
2. No single prize in a small society lottery may be worth more than £25,000.
3. Rollovers are only permitted where every lottery affected is also a small society lottery promoted by the same society, and the maximum single prize is £25,000.
4. Every ticket in the lottery must cost the same and the fee must be paid to the society before entry into the draw is allowed.

Tickets

Lotteries may involve the issuing of physical or virtual tickets to participants (virtual, for example, being in the form of an email or text message, which can be retained or printed). A purchaser of a small society lottery ticket must receive a document which identifies:

• the name of the promoting society;
• the price of the ticket (there is no maximum price);
• the name and address of the member of the society who is designated as having responsibility at the society for promoting small lotteries, or (if there is one) the external lottery manager; and
• the date of the draw, or information enabling the date of the draw to be determined.

All small society lottery operators the Council registers must maintain written records of any unsold and returned tickets for a period of one year from the date of the lottery draw. The Council is permitted to inspect the records of the lottery for any purpose related to the lottery.

Lottery tickets may only be sold by persons over the age of 16, to persons over the age of 16. A person commits an offence if they invite or allow a child to enter a lottery other than certain classes of exempt lottery (for example, incidental non-commercial lotteries, private lotteries, work lotteries and residents’ lotteries).

Societies running lotteries must have written policies and procedures in place to help prevent and deal with cases of under-age play.

With regards to where small society lottery tickets may be sold, the Council applies the following criteria to all small society lotteries it registers:

• tickets should not be sold in a street (which includes any bridge, road, lane, footway, subway, square, court or passage, including passages through enclosed premises such as shopping malls); and
• tickets may be sold from a kiosk, in a shop or door-to-door.

This approach is consistent with the operating licence conditions imposed upon operators of large lotteries and local authority lotteries.

Prizes

Prizes awarded in small society lotteries can be either cash or non-monetary. The amount of money deducted from the proceeds of the lottery to cover prizes must not exceed the limits set out by the Act, i.e. that combined with any expenses incurred with the running of the lottery, such as manager’s fees, they must not comprise more than 80% of the total proceeds of the lottery. Donated prizes would not be counted as part of this 80% (as no money would be withdrawn from the proceeds to cover their purchase) but should still be declared on the return following the lottery draw.

Returns

The following information must be sent by the registered society as returns to the Council following each lottery held. This information will allow the Council to assess, in particular, whether financial limits are being adhered to and to ensure that any money raised is being applied for the proper purpose:

• the arrangements for the lottery – specifically the date on which tickets were available for sale or supply, the dates of any draw and the value of prizes, including any donated prizes and any rollover;
• the proceeds of the lottery;
• the amounts deducted by the promoters of the lottery in providing prizes, including prizes in accordance with any rollovers;
• the amounts deducted by the promoters of the lottery in respect of costs incurred in organising the lottery;
• whether any expenses incurred in connection with the lottery were not paid for by deduction from the proceeds, and, if so, the amount of expenses and the sources from which they were paid.

Return Forms are available from the Licensing Team, copies of which will be sent with Society Registrations. The Council is required to retain these for a minimum period of three years from the date of the lottery draw. They will be available for inspection by the general public for a minimum period of 18 months following the date of the lottery draw.

Where societies run more than one small lottery in a calendar year, the Council will monitor the cumulative totals of returns to ensure that societies do not breach the annual monetary limit of £250,000 on ticket values. The Commission must be notified by local authorities if returns reveal that society’s lotteries have exceeded the values permissible and such notifications should be copied to the society in question. The Commission will contact the society to determine if they are going to apply for a lottery operator’s licence, thereby enabling them to run large society lotteries lawfully, and will inform the local authority of the outcome.

Fees

The application fee to accompany an application for registration is £40. You'll need a debit or credit card to pay the fee.

Each year, in order to maintain the registration, an Annual Fee of £20 will be payable. The Licensing Team will send a reminder when this fee is due.

Failure to pay this fee is likely to result in the Society’s registration being cancelled meaning that any lottery activity will be illegal until a new application under the Gambling Act 2005 has been granted.

Social Responsibility

Lotteries are a form of gambling and as such societies and local authorities are required to ensure that children and other vulnerable people are not exploited by lotteries.

The minimum age for participation in a lottery is 16 years of age. A person commits an offence if they invite or allow a child to enter a lottery other than certain classes of exempt lottery (for example, incidental non-commercial lotteries, private lotteries, work lotteries and residents’ lotteries).

Exempt Lotteries

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 on the same premises may participate
• Customer lotteries – only customers at the business premises may participate.

Incidental non-commercial lotteries

An incidental non-commercial lottery is one that is incidental to a non-commercial event. Examples may include a lottery held at a school fete or at a social event such as a dinner dance. An event is non-commercial if all the money raised at the event including entrance fees goes entirely to purposes that are not for private gain; therefore a fundraising social event with an entrance fee would be non-commercial if the profits went to a society but would not be non-commercial if the profits were retained by the organiser for private gain.

The Gambling Act 2005 specifies that:

• the promoters of the lottery may not deduct more than the amount prescribed by the Secretary of State from the proceeds in respect of the expenses, such as the cost of printing tickets, hire of equipment etc. This is currently £100; not more than £500 can be spent on prizes
• the lottery cannot involve a rollover of prizes from one lottery to another
• all tickets must be sold at the location during the event, and the result made public while the event takes place

Private Lotteries

There are three types of private lotteries that qualify as exempt lotteries:

• Private lottery – these can only be promoted by one of its members and tickets can only be sold to other members of that same society and persons on premises used for the administration of the society. The lottery may only be promoted for a purpose for which the society is conducted, and the society can be any group or society provided it is not established and conducted for purposes connected to gambling, eg working men's clubs
• Work lottery – the promoter of the lottery must work on the premises and tickets can only be sold to other people who work on the premises. The lottery must not be run for profit and all the proceeds must be used for prizes or reasonable expenses incurred in organising the lottery eg a grand national sweepstake
• Residents’ lottery – these must not run for profit and all the proceeds must be used for prizes or reasonable expenses. The promoter of the lottery must reside on the premises and tickets can only be sold to other residents of the same premises. The residency agreement can still be satisfied where the premises are not the sole premises in which a person resides eg a student halls of residence

No advertisement for a private, work or residents’ lottery may be displayed or distributed except at the society or work premises, or the relevant residence, nor can advertisements be sent to any other premises.

Private lotteries must comply with conditions set out in schedule 11 of the Act relating to tickets. In summary these are:

• a ticket in a private lottery may be sold or supplied only by or on behalf of the promoters.
• tickets (and the rights they represent) are not transferable.
• each ticket must state the name and address of the promoter of the lottery, the persons to whom the promoter can sell or supply tickets and the fact that they are not transferable.

Private lotteries cannot be conducted on vessels. The Act’s definition of a vessel (section 353-1) is:

• anything (other than a seaplane or amphibious vehicle), designed or adapted for navigation or other use in, on or over water
• a hovercraft
• anything, or any part of any place, situated on or in water

The price paid for each ticket in a private lottery must be the same, must be shown on the ticket and must be paid to the promoters of the lottery before any person is given a ticket.

Customer Lotteries

A customer lottery is a lottery run by the occupiers of business premises, who sell tickets only to customers present on their premises.

The Act requires that in customer lotteries:

• the lottery must be arranged to ensure that no profit is made
• tickets may be sold or supplied only by or on behalf of the promoter
• no advertisement may be displayed or distributed except on the business premises nor sent to any other premises
• another customer lottery cannot take place within seven days on the same business premises;
• tickets (and the rights they represent) are non transferable
• no ticket may result in the winner receiving a prize worth more than £50
• no rollovers of prizes are permitted
• price payable for each ticket must be the same

Each ticket in a customer lottery must state:

• the name and address of the promoter of the lottery
• the persons to whom the promoters can sell or supply tickets
• that the rights conferred by the sale or supply of a ticket in a customer lottery are not transferable

Customer lotteries cannot be conducted on vessels.

Free Draws and Prize Competitions

Free draws are exempt from statutory control under the Gambling Act 2005.

Prize ‘skill’ competitions are also exempt in that they depend, in part, on the exercise of skill, judgement or knowledge of participants. A genuine prize competition must reasonably be likely to:

• prevent a significant proportion of people who wish to participate from doing so
• prevent a significant proportion of people who participate from receiving a prize.

If these barriers to entry and success can be shown, the process will not be deemed to rely wholly upon chance and will, therefore not be defined as a lottery.

This web page has been made as comprehensive as possible. However, in attempting to simplify the law, certain requirements have been omitted. Full details of what is required are in the legislation itself. Laws can and do change. This information was accurate when produced, but may have changed since. The Council must advise that only the Courts can give an authoritative opinion on statute law.