Why deregulation of charity lotteries can only be a good thing

  

A charity lottery (more technically called a society lottery) is one that is run to support good causes, run by a non-commercial organisation. At a time when many charities are experiencing a drop in voluntary income and statutory funding, lotteries have become a key revenue stream for many charities.

However, charity lotteries are heavily regulated in the UK, and there have been increasing calls from the charity sector to change this. The Department for Digital, Culture, Media & Sport has just finished its consultation to look at the options to raise society lottery turnover and prize limits.

nfpSynergy research has shown that the public are in favour of reducing the caps placed on charity lotteries. We believe there are many reasons why relaxing charity lottery regulation can only be a good thing. Here are some of them:

 

1. There is great potential for growth of charity lotteries, and the public is on board with it

Charity lotteries contributed £255.56 million to good causes in 2016-17, and proceeds have grown year-on-year.[1] This provides real opportunities, particularly given that individual giving to charities has been declining since the financial crisis.

Despite the impressive levels of funds raised through charity lotteries, there are caps in place that limit the annual sales from a lottery, the individual draw sales, and the prize amounts. When we asked the public whether lottery prizes and ticket sales from charity lotteries should be capped, only 22% of people wanted to see a cap on prizes, while just 11% felt the same about tickets.

 

2. Charity lotteries are the most regulated source of charity income

Every lottery, from the very first a charity runs, has to make a 20% contribution to the cause for the charity. The ‘20% rule’ is a good longer term aim for charity lotteries, but is acting as a barrier against new smaller lotteries forming. Imagine if a business was required to make a profit on everything it did, including its very first venture? The 20% contribution should be spread over time to make it more feasible for smaller charities to set up a lottery.

Additionally, when many charities register to run a charity lottery, they are treated in the same way that casinos are. Arguably some areas of lottery regulation should be applied across the board, such as having processes in place to identify and support individuals with gambling addictions. However even in this situation, it doesn’t make sense to regulate charity lotteries in the same way as other forms of gambling; issues around gambling addictions are in fact much lower among charity lotteries because players usually take out a subscription, where there is a clear limit to how many tickets are allowed per individual or household.

All in all, when it comes to registration and regulation of charity lotteries, processes should be adjusted according to the turnover of the lottery/organisation.

 

3. There is little evidence to suggest deregulation of charity lotteries would have a significant effect on the National Lottery

Protecting the National Lottery has been the basis of much of the existing regulation of charity lotteries. However the Gambling Commission’s advice, as part of the DCMS consultation, was that to date the growth of the society lottery sector has not been at the detriment of National Lottery sales.

In February 2015, our research with 1,000 British adults showed that the majority of people disagree with charity lottery regulations. Three in four people (74%) felt that charity lotteries should be free to raise as much money as the National Lottery. Several were unsure, leaving just 8% in favour of regulation. 63% were also opposed to any regulations that made it difficult for charity lotteries to compete with the National Lottery.

The National Lottery clearly does a wonderful job of supporting good causes. Relaxing charity lottery regulation would not impact on this work, and would allow the lottery sector as a whole to raise far more for good causes.

nfpSynergy has submitted this evidence on public opinion towards charity lottery regulation to DCMS’ consultation. We have written two research reports on lottery deregulation:

  1. In 2013 A Chance to Give explored charity professionals’ views towards charity lotteries. 
  2. In 2015 Just the Ticket looked at public attitudes towards the regulation of charity lotteries.

We will be repeating the research with the public this year.

 

By Fiona Wallace
 

[1] Department for Digital, Culture, Media & Sport (2018) Consultation on Society Lottery Reform.

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