The government has refused to raise a ticket sales limit on society lotteries despite research concluding that doing so would increase funding for charities.
The study, published yesterday after being commissioned by the previous Conservative administration, found raising the annual sales limit on the lotteries from £50m to £100m per operator “would lead to a net increase in returns to good causes of between £16m and £132m”.
The figure was based on projected growth in sales by the People’s Postcode Lottery (PPL), the largest society lottery, and took into account an expected corresponding decline in National Lottery ticket sales of between £25m and £148m.
“The government wants a lotteries sector centred on the National Lottery, while continuing to support the hundreds of wider society lotteries,” said Baroness Twycross, the gambling minister, in a written response to the study findings.
“This model has worked successfully for 30 years and created the conditions for the National Lottery to flourish and support life-changing projects, alongside a thriving society lotteries sector.”
Clara Govier, managing director of PPL, the only society lottery constrained in practice by the £50m ticket sales cap, said the government’s decision “beggars belief”, given that increasing the limit would come at “zero cost to the Treasury”.
“This is a hammer blow for thousands of charities across the UK, big and small, that deliver vital everyday services to those most in need,” she said.
“[It] is a clear failure to put the needs of the most vulnerable first, and actively blocks the wishes of many of Britain’s biggest charities.”
Meanwhile, Darren Henley, chief executive of Arts Council England and chair of the National Lottery Forum, welcomed “the government’s renewed commitment to supporting an environment where the National Lottery can continue to change lives for the better for decades to come”.
National Lottery operator Allwyn also voiced support for the government’s “clear-sighted decision to protect The National Lottery and ensure a lotteries sector centred on one national lottery”.
Charities’ reliance on lottery funding
The study, which surveyed 100 charities including a deliberate oversampling of those operating their own lotteries, found 69% of organisations received funding from an external lottery.
While the National Lottery was the most used, benefiting 52% of charities, 44% received money from third-party society lotteries.
Lottery money of all types was the most common funding source for the charities surveyed, with 69% of respondents drawing on it. By comparison, 67% took funds from fundraising events, with 62% raising money via regular donations through subscription programmes.
The research found charities that receive lottery funding are “highly reliant” on it for achieving their goals.
Around half of the charities receiving external lottery funding said their charitable impact depends on it – 52% for National Lottery funding and 44% for third-party society lottery funding.
While there was no overall preference for one type of external lottery funding, the study report noted that the larger sums the National Lottery can provide are an important factor in its favour.
By contrast, charities liked the greater control they could typically exercise over how to spend the money sourced from society lotteries.
Wendy Chamblerlain, the Liberal Democrat MP for Fife who earlier this year introduced proposals to remove the £50m society lotteries sales cap, said she was “deeply disappointed” by the government’s response to the study.
“The research makes clear that raising the annual sales limit would provide a lifeline for countless community organisations, enabling them to plan better, fundraise more effectively, and deliver services so many people rely on,” Chamberlain said.
“This feels like a missed opportunity to back our vital charity sector at a time when demand is rising and fundraising is increasingly difficult,” added the MP, who worked with the People’s Postcode Lottery on her private member’s bill, which received the backing of more than 100 charity leaders and proposed altering the Gambling Act 2005.
The £50m cap was introduced in 2020, when the government raised operators’ annual ticket sales limit from £10m to £50m.
Voluntary code of conduct for prize draws
At the same time as announcing the decision on society lotteries, the government said it would introduce a voluntary code of conduct for the prize draws such as Omaze, that are not regulated by the Gambling Commission but often fund charities.
A second study examining gambling harms and consumer protection around prize draws and competitions (PDCs), also commissioned by the Conservative government and published this week, set out the case for different forms of intervention in the sector.
It found that making the PDC sector – worth an estimated £1.3bn annually – subject to regulation by the Gambling Commission could have a “significant positive impact” on protecting charity donations as well as safeguarding customers.
The study estimated that only 10% of PDCs’ profits go to charities currently, compared to the 20% society lotteries must contribute.
But the study, by London Economics, found that to consumers, PDCs and society lotteries are “nearly indistinguishable”, and that growth in the PDC industry may come at the expense of the lottery industry.
“A reduction in sales for the National Lottery and society lotteries directly leads to a reduction in contributions towards good causes supported by these lotteries,” it said.
The study concluded that a voluntary code of conduct would have only a “slight positive impact” on both charity donations and consumer protections.
Nevertheless, in her written statement, Baroness Twycross said the code “will help provide a uniform approach to strengthen player protections, increase transparency and improve accountability” across “this relatively new sector”.
George Collins, chair of the Lotteries Council, criticised the government’s response to the research on both society lotteries and PDCs.
“This is a missed opportunity to raise more money for the nation’s good causes and to put the charity lottery sector on a firmer and fairer footing in the future,” he said.
A spokesperson for Omaze, by far the largest PDC operator with a market share of more than 60%, said the firm had raised more than £93m for charities and “welcomes the government’s research and plans”.
“[Omaze] is pleased to be working closely with the Department of Culture, Media and Sport to develop a voluntary code of conduct, to ensure Omaze’s high levels of consumer protections are matched across the industry,” the spokesperson said.
The Gambling Commission declined to comment on the new research findings.
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