The regulation of society lotteries should be tightened for large, commercially run organisations but relaxed for smaller and start-up lotteries, the House of Commons Culture, Media and Sport Committee has said.
In a report marking the conclusion of its inquiry into society lotteries, published today, the committee says there should be more differentiation between the rules applied to most lotteries – which are small and local – and those applied to larger ones, especially those run by commercial organisations.
The report says that, for new lotteries, the rule dictating that they must give at least 20 per cent of ticket proceeds to good causes should be spread over an extended period, such as three years, to help them cope with start-up costs.
But it says that while it recognised that it would be a "disincentive to innovation" to increase this beyond 20 per cent, large, established lotteries should be required to contribute a higher percentage to good causes.
In its report, the committee recommends that the existing legislation be amended to recognise a class of umbrella lotteries that would have their own set of limits on individual draws, annual sales and prizes.
The report says it is wrong that umbrella lotteries, such as those run by the Health Lottery or the People’s Postcode Lottery, are permitted to raise the aggregate of the maximum amounts that each of their constituent lotteries are allowed to raise.
For example, an umbrella lottery formed of 10 large society lotteries could raise 10 times the maximum £10m for a single lottery per year, it says.
"We consider it wrong that the maximum limits on society lotteries should be bypassed in this way," says the report.
The report also says that the 35 per cent cap on operating costs – which does not include prizes and money set aside for rollovers – should be reintroduced for the largest lotteries.
John Whittingdale, the Conservative MP for Maldon in Essex and chair of the committee, said: "Many charities now depend upon society lotteries as a vital source of funds. We want to see the maximum return to good causes and believe that the regulatory regime governing society lotteries should be designed to encourage that. Provided that the lottery remains focused on its primary purpose, the licensing regime should be light, including continued exemption from gambling and lottery taxes.
He said that the committee was concerned about the growth of large, "so-called umbrella lotteries", which are designed to get around the statutory maximum amounts for sales and prizes.
"We therefore recommend the creation of a new category and the reintroduction of a cap of 35 per cent on operating costs for the large, well-established lotteries," he said. "This will help to ensure that these lotteries are genuinely maximising the amount of money they raise for the causes they support."
Commenting on the report, a spokesman for the Health Lottery, which is made up of 51 local community interest companies, said: ''We regret that the committee didn't see the full value in our evidence-based arguments and that it feels that we present some sort of a problem, although it is not at all clear what that problem is.
"What is clear is that we have so far raised more than £63m to support more than 1,500 projects and helped 280,000 people in some of the most deprived areas of Great Britain.''