Proposed changes to make fundraising easier

Companies often find that certain types of fundraising (for example running a raffle or sweepstake) for charity can be difficult and onerous due to gambling regulations.

Companies find that they need to obtain a Gambling Commission operating licence, register with a local authority or 'squeeze' the lottery into an exemption under the Gambling Act.

The Government has proposed draft legislation which will relax the rules surrounding the holding of small lotteries for fundraising purposes. If approved, the Legislative Reform (Exempt Lotteries) Order 2016 will come into force on 6 April next year.

What is a lottery?

A raffle or prize draw will be classed as a lottery if it meets the following conditions:

  • payment is required to participate;
  • one or more prizes are awarded; and
  • those prizes are awarded by chance.

Lotteries, which are a form of gambling, cannot be run for private or commercial gain. It is a criminal offence to run a lottery unless you have a lottery operating licence (or register with a local authority for certain types of lottery) or the lottery falls into one of the exemptions under the regulations.

The current position v the proposed position - Exempt Lotteries

Below are some examples of types of lotteries that do not require a licence or registration, the current common difficulties which mean they are unsuitable for fundraising and how the position will change for the better:

Type of Lottery

Current position/ Common issues

What will change?

Incidental non-commercial lotteries

 

i.e. a lottery held at a school fete or dinner dance
  • must be at a non-commercial event only i.e. where none of the proceeds from the event (including entrance fees or sales of food and drink) are used for private gain.
  • all tickets must be sold at the location during the event the result must be made public while the event takes place.
  • incidental non-commercial lotteries will be able to be held at commercial events. This means that organisers of a non-charitable event will be able to run a lottery, provided that all proceeds (minus a maximum of £100 for expenses) from the lottery itself go to good causes.
  • the results will no longer need to be announced during the event.
  • note: there will still be a maximum prize limit of £500.

Private society lotteries
  • tickets can only be sold to other members of that society and to people on the premises used for the administration of the society.
  • may only be promoted and raise proceeds for the purposes for which the society is conducted.
  • private societies will be free to run lotteries to fundraise for any good cause, not just for the benefit of the society itself.

Work lotteries
  • tickets can only be sold to other people who work on the same single set of premises.
  • must not be run for profit and so is unsuitable for fundraising.
  • work lotteries will be permitted to make a profit provided that this is for the benefit of a good cause.

Residents' lotteries
  • the promoter of the lottery must reside in the premises and tickets can only be sold to other residents of the same single set of premises.
  • must not be run for profit and so is unsuitable for fundraising.
  • residents' lotteries will be permitted to make a profit provided that this is for the benefit of a good cause.
  • organisers of lotteries will have less prescribed information to display on each ticket.  

If you require more information on the proposed changes or wish to run a lottery and require legal advice please contact the team who will be happy to assist.

Disclaimer

This information is for educational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. © Shoosmiths LLP 2024.

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