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Government to consult on the minimum amount society lotteries should give to good causes

Move follows concerns that Health Lottery ticket sales may have taken revenue from the National Lottery

Health Lottery
Health Lottery

The government will launch a consultation on whether to change the minimum proportion of proceeds a society lottery has to give to good causes.

The consultation, which will take place next year, comes in response to the increase in professional lottery managers and umbrella schemes, such as the Health Lottery, which manages 51 society lotteries. 

It will look at ways of ensuring the lottery market delivers the maximum benefit to good causes and whether there is a case for changing the minimum percentage of proceeds that society lotteries are required to apply to good causes, which is currently 20 per cent.

Maria Miller, Secretary of State for Culture, Media and Sport, said: "Lotteries are hugely important in raising very large amounts money for charities and community groups up and down the country.

"But with a changing market, it is right that we make sure that the main priority for each and every lottery is to raise money for good causes."

The media owner Richard Desmond launched the Health Lottery, which gives 20p of every £1 to local health-related good causes, in October 2011. Earlier this year, Camelot, operator of the National Lottery, which gives 28p per £1 to good causes, estimated it was losing £1m a week in sales to the Health Lottery and initiated unsuccessful judicial review proceedings against the Gambling Commission for its alleged failure to provide adequate oversight of the Health Lottery.

But a draft report, Assessment of Lottery Market Issues, published by the Department for Culture, Media and Sport to coincide with the announcement of the consultation, says "there is no clear evidence that the Health Lottery has taken very significant revenues from the National Lottery or that it poses a threat to existing society lotteries".

The research, for the National Lottery Commission and the Gambling Commission by Nera Economic Consulting, suggests "a plausible range" for the impact of the Health Lottery on National Lottery sales is between £40,000 and £305,000 a week. But its authors "cannot definitely rule out a more substantial impact". 

The report says it is not clear whether the Health Lottery’s business model is sustainable in the medium to long term and therefore its authors doubt that future expansion of the Health Lottery poses a significant threat to the National Lottery. But there might be some risk from a new society lottery with a lower cost business model than the Health Lottery, it adds.

A Camelot spokesman said the government was right to explore different ways of ensuring all lotteries deliver maximum benefit to good causes. But he said Nera’s report is, in Camelot’s view, "not a true reflection of the scale of the actual impact" of the Health Lottery.

He said its own econometric analysis showed that, based on its first seven months of operation, 62 per cent of the Health Lottery’s sales were cannibalised from the National Lottery. "Based on the Health Lottery’s reported first year sales of £119m, that would work out at some £73m in lost National Lottery sales in the year from October 2011," he said.

"Looking at sales in isolation ignores the very serious concerns that have been raised about the dangerous precedent that would be set if, through political inaction, other commercial operators are encouraged to follow the Health Lottery’s model (and minimal rate of return to good causes) and set up similar industrial-scale, mass-market lotteries as direct rivals to the National Lottery," he said.

A Health Lottery spokeswoman was pleased the report recognised that it was likely to have increased the amount of money raised by lotteries for good causes and welcomed the opportunity to participate in the DCMS consultation. She said that, despite making a loss before tax of £28.5m last year, the Health Lottery raised about £28m for good causes in its first year.

Ben Kernighan, deputy chief executive at the National Council for Voluntary Organisations, welcomed the consultation announcement. "With charities facing increasing demand and falling income it’s crucial we maximise the proportion of lotteries money going to charities," he said.

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