12.Lotteries, prize competitions and free draws
If you intend to run a lottery, prize competition or free draw for charitable purposes, you need to follow any gambling regulations that may apply, including laws relating to the process of allocating prizes fairly. This section sets out the responsibilities for fundraising organisations taking part in these activities.
In this section, ‘you’ means a charitable institution or third-party fundraiser running a lottery for the benefit of a charitable institution, unless we tell you otherwise. For lotteries, ‘society’ means the charitable institution.
The law in England, Wales and Scotland
Lotteries include raffles, tombolas, sweepstakes and some other activities.
In the law of England, Wales and Scotland, a lottery is a type of gambling which has three essential characteristics.
- You must pay to enter the game.
- There is always at least one prize.
- Prizes are awarded purely by chance.
The Gambling Act 2005 created six categories of lotteries.
- Private lotteries, including:
- private-society lotteries;
- work lotteries; and
- residents’ lotteries.
- Lotteries held at events (known as ‘incidental lotteries’).
- Customer lotteries. (Please note that, as customer lotteries cannot make a profit, they are not suitable for fundraising.)
- Small-society lotteries.
- Large-society lotteries.
- Local-authority lotteries. (These are run by local authorities and so are outside the scope of the code.)
Each type of lottery has its own standards and you can find an overview of these in the Gambling Commission Guidance.
A lottery run by or for the benefit of a charitable institution will fall under the definition of a society lottery. However, that does not prevent you or those fundraising on your behalf from running lotteries under another appropriate category.
Lotteries which fall within categories 1 and 2 above do not need a licence or permission from any authority if the charitable institution meets the rules that apply. Tombolas, lotteries and raffles held at events which fall within category 2 are a common type of fundraising. These do not need a licence or permission from any authority (although you should get permission from the event organiser or site owner). For more information see the Gambling Commission’s guidance on organising small lotteries.
For lotteries which fall within categories 4 and 5, the society must have the relevant permission from either a local authority (in the case of small society lotteries) or the Gambling Commission (in the case of large society lotteries) before marketing or selling tickets. You can visit the Gambling Commission’s website for more information on small-society lotteries that don’t need a licence and society lotteries which need a licence or registration.
Sometimes, large charitable institutions outsource part of the work involved in running large-society lotteries to an external lottery manager (ELM). You can find Gambling Commission guidance on ELMs here.
The law in Northern Ireland
Lotteries in Northern Ireland must meet the Betting, Gaming and Lotteries (NI) Order 1985, as amended by the Betting and Lotteries (NI) Order 1994 and as added to by the Lotteries Regulations.
There is no legal definition of a lottery in the law of Northern Ireland.
Under the order, all lotteries are unlawful unless they are:
- small lotteries which are a small part of exempt entertainment (that is, entertainment which does not need a licence);
- private lotteries;
- society lotteries; or
- part of the National Lottery.
Each type of lottery has its own rules. For more details, see the Northern Ireland Department for Communities’ guidance.
12.1.Lotteries – general responsibilities
In this section, ‘you’ means a charitable institution or third-party fundraiser running a lottery for the benefit of a charitable institution, unless we tell you otherwise.
You must meet the relevant national legal requirements for lotteries.
You must make sure you are not running an illegal lottery.
To run an exempt lottery (one which does not need a licence), you must meet the conditions set out in law.
If you need to hold a licence for the type of lottery you are running you must meet the relevant codes of practice, licence conditions, and conditions set out in law and relevant regulations.
In England, Wales and Scotland, if you hold a licence for the type of lottery you are running, you must tell the Gambling Commission about any matters that will have a significant effect on your organisation or that the Gambling Commission would reasonably need to be aware of when carrying out its duties. For more information on what you need to tell the Gambling Commission about, see its licence conditions and codes of practice.
12.2.Role of the promoter
In this section, ‘you’ means a charitable institution or third-party fundraiser running a lottery for the benefit of a charitable institution, unless we tell you otherwise. For lotteries, ‘society’ means the charitable institution.
The designated individual promoter must be authorised in writing by the governing body of the society to act as a promoter.
By law, the promoter is responsible for making sure the lottery is run within the law and must make sure that anyone distributing and selling tickets is aware of the legal rules that apply, even if they use a subcontractor to sell the tickets.
12.3.Considerations other than the Gambling Act
In this section, ‘you’ means a charitable institution or third-party fundraiser running a lottery for the benefit of a charitable institution, unless we tell you otherwise. For lotteries, ‘society’ means the charitable institution.
If you are a society using a premium phone line to allow people to enter your lotteries, you must meet the code of practice published by the PSA (the independent regulator of premium-rate services in the UK). A number of sections of its code are relevant to lotteries.
If you are promoting society lotteries, you must meet the Code of Non-broadcast Advertising and Direct and Promotional Marketing (CAP code) and the Code of Broadcast Advertising (BCAP code), including:
- CAP - 08 Promotional marketing;
- CAP - 16 Gambling;
- CAP - 17 Lotteries;
- BCAP - 17 Gambling; and
- BCAP - 18 Lotteries.
In Northern Ireland, you must not send tickets that have been sold for a private or society lottery through the post.
12.4.The draw
In this section, ‘you’ means a charitable institution or third-party fundraiser running a lottery for the benefit of a charitable institution, unless we tell you otherwise. For lotteries, ‘society’ means the charitable institution.
The draw must be witnessed and you should make a record of the result.
You must include all paid-for, valid ticket entries in the draw.
If you are going to transfer late entries to the next draw, you must be clear about this when you sell the ticket.
If, for any reason, the draw date needs to be delayed from that shown on the ticket, you must take all reasonable steps to make sure that everyone who has bought a ticket knows about the change, and you must discuss it with the issuer of the licence.
12.5.Procedure after the draw
In this section, ‘you’ means a charitable institution or third-party fundraiser running a lottery for the benefit of a charitable institution, unless we tell you otherwise. For lotteries, ‘society’ means the charitable institution.
You must return all filled-in ticket stubs and payments to the promoter for audit purposes.
You must not make details of winners public without their permission.
You must contact all winners within seven days of the draw.
You must make all reasonable efforts to award prizes to the holders of winning tickets.
12.6.Prize competitions and free draws
In this section, ‘you’ means a charitable institution or third-party fundraiser running a lottery for the benefit of a charitable institution, unless we tell you otherwise. For lotteries, ‘society’ means the charitable institution.
England, Wales and Scotland
The Gambling Act does not apply to prize competitions and free draws as long as they meet the conditions set out in the act. The Gambling Commission has no regulatory responsibilities relating to genuine prize competitions and free draws, but it does monitor the boundary between them and lotteries to make sure that schemes claiming to be prize competitions or free draws are not illegal lotteries.
To be a prize competition you must make sure that anyone taking part has a level of knowledge or judgement or displays an element of skill that will prevent a significant proportion of people from entering or from winning a prize.
To be a free draw the arrangement must either be completely free to enter or have a free method of entry. This free method of entry must either be a letter sent by ordinary post (first-class or second-class post) or another method of communication that is no more expensive and no less convenient than the paid method. The system for allocating prizes must not distinguish between entries made through the free or the paid method of entry.
Northern Ireland
Northern Ireland operates under rules preventing any form of purchase that allows you to enter a prize draw. Often, promoters running UK-wide prize draws will exclude people in Northern Ireland from the promotion. For Northern Ireland prize draws, you must either exclude people who live in Northern Ireland or find a ‘no-purchase necessary’ way to promote the prize draw in Northern Ireland.
- Gambling Commission: Fundraising, raffles and lotteries
- Gambling Commission: Free draws and prize competitions