Legislation protecting the National Lottery stifles charity lotteries, report claims

A study part-written by Joe Saxton of nfpSynergy says that more money could be raised for charities if lottery regulation were to be reformed

Lottery
Lottery

Charity lotteries could raise more money for good causes if they were not being stifled by legislation designed to protect the National Lottery, research by the consultancy nfpSynergy suggests.

A Chance to Give, published today, claims more money could be raised for charities if lottery regulation were to be reformed.

It recommends that the limits on turnover and prizes for charity – or society – lotteries be removed. Under rules designed to protect the National Lottery from competition, charities are not allowed to raise more than £10m a year from lotteries and no more than £4m from a single lottery. Prize pots are capped at £400,000 per lottery.   

The report says that these constraints make it harder for large charities to use lotteries to boost their voluntary income. It points out that the National Lottery is nearly 100 times bigger than its nearest competitor, with an annual income of £6.5bn predicted for 2013/14.

Camelot, which operates the National Lottery, is concerned about competition from the Health Lottery, which is made up of 51 society lotteries. The Health Lottery, set up by the media owner Richard Desmond, raised £24.2m in its first year and gives a minimum of 20p in every £1 it makes to good causes.

The report includes a survey of 180 charities about their experience of running society lotteries. This found the most challenging regulatory issue was the 80:20 rule, which says each charity lottery must make a minimum contribution to a cause of 20 per cent.

The Department for Culture, Media and Sport will launch a consultation this year on whether to change the minimum proportion of proceeds a society lottery has to give to good causes.

The Institute of Fundraising and the Lotteries Council, a membership body for organisations that run lotteries, have written to Maria Miller, the culture secretary, to raise concerns that increasing the minimum proportion could lead to less money overall going to good causes and the closure of many society lotteries.

NfpSynergy’s report also calls for lottery ticket purchases to qualify for Gift Aid and for it to be made easier to register and run a charity lottery.

Joe Saxton, co-founder of nfpSynergy and one of the report’s authors, said: "There is more regulation for setting up a charity lottery than for setting up the charity itself. Lotteries are not tax-effective and regulation is hindering their growth. They are also highly regulated, as if they create problem gambling, yet the government’s own research shows there is negligible evidence that they do."

But a spokeswoman for Camelot said increasing the prize limits for society lotteries would blur the "crucial distinction" between the UK-wide National Lottery and society lotteries, which operate on a local basis.

"If you open up a national lottery to competition from lots of different society lotteries operating at a similar level, the inevitable consequence is that the money players spend becomes fragmented across all of the different lotteries available," she said.

A spokesman for the DCMS said it would respond to recommendations about society lotteries after the consultation had finished.

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