The Department for Culture, Media & Sport is still planning to go ahead with its long-awaited consultation on whether to change the minimum contribution made by society lotteries to good causes.
The DCMS announced in December 2012 that it would launch a consultation on the minimum amount of proceeds going to good causes, but it has not yet taken place.
A spokesman for the department said: "The consultation is currently on hold because there are wider-ranging issues than we originally thought. There is work going on in the background but no date for the launch."
He was unable to specify what the issues were, but said the consultation would still go ahead.
The Lotteries Council, which represents charity lotteries, and the Institute of Fundraising last year raised concerns that increasing the minimum proportion of proceeds that goes to good causes, which is currently 20 per cent, could lead to less money overall going to good causes and the closure of many society lotteries.
Camelot, the National Lottery operator, has been calling for the minimum contribution to be significantly increased. It gives 28 per cent of the revenue to good causes.
Camelot also wants a new 15 per cent cap introduced on the costs and profits of large-scale lotteries. It is concerned about the effect on good-cause money of the Health Lottery, which is made up of 51 society lotteries and gives the minimum 20 per cent from ticket sales to good causes.
Clive Mollett, chair of the Lotteries Council, which represents non-commercial lotteries, told Third Sector this week that the proposals being considered by the government were "potentially extremely damaging".
"The real issue with all these things is the ability or otherwise of society lotteries to grow through acquisition and new players," he said. "The sector has seen tremendous growth in the past two to three years – 44 per cent last year.
"We can achieve that and make it sustainable only by investing and recruiting new players into the market. To try to cap the expenses involved would mean any growth would be severely restricted."
Mollett said the society lotteries sector had been trying to get ministers and officials to focus on lotteries as a technique to expand giving.
"I think they are aware of some of the unintended consequences," he said. "But I don’t know whether they’ve gone beyond that to think about how some of the restrictions in sales – no more than £4m in a single draw and £10m a year, and the prizes limited to 10 per cent – hold back the development and growth of society lotteries."
The St Giles Hospice has a weekly lottery and two raffles that raise about £1m a year towards the care and support it provides. Richard Simmonite, lottery commercial manager at the hospice, said 50 per cent of proceeds were spent on costs and the remaining 50 per cent went towards hospice care.
"A 15 per cent cap on expenses would mean the St Giles Hospice lottery simply couldn’t operate," he said.
"We would welcome a discussion on the segregation of national lottery operators and local good cause lotteries like ourselves, but would urge the government to think carefully before introducing any regulations that could prove devastating for this vital source of fundraising."
A spokeswoman for Camelot said: "Our position is that we believe all lotteries should deliver social good by raising as much money as possible for their beneficiaries.
"We therefore believe that the government is right to explore different ways of ensuring that all lotteries deliver the maximum benefit to good causes – and, though the timing for the launch of the consultation remains unclear, we look forward to participating fully in it."
It was difficult to define what constituted an "industrial-scale lottery", she said, because of a lack of available information across the industry about overall sales, returns to good causes, profits and costs.
"We are using the term to describe lotteries that appear to enjoy a sales, marketing and advertising presence across much of the UK and, in some circumstances, nationally," she said.