Relaxations for exempt lotteries - good news for good causes

The Legislative Reform (Exempt Lotteries) Order 2016 (SI 2016/124) (the "Order") deregulates incidental non-commercial and private lotteries, so that as of 6 April 2016, it will be easier to raise funds for charities and good causes through small scale lotteries.

The Legislative Reform (Exempt Lotteries) Order 2016 (SI 2016/124) (the "Order") deregulates incidental non-commercial and private lotteries, so that as of 6 April 2016, it will be easier to raise funds for charities and good causes through small scale lotteries.

Incidental non-commercial and private lotteries fall within the list of permitted lotteries and are exempt from licence and registration requirements. However, they must still comply with certain conditions. The purpose of the Order is to relax some of these conditions with a view to allowing them to be used for fundraising activities.

Incidental non-commercial lotteries

An incidental non-commercial lottery is a lottery which is held at non-commercial events such as school fairs or social events. In order for the event to be classed as "non-commercial", all proceeds from the event, including ticket sales/entrance fees, food and drink sales etc. must be donated to purposes which are not for private gain. Therefore, if a promoter retained proceeds from ticket sales, then the event would not be a non-commercial event. As such, prior to the Order, it was very difficult for organisers to operate small scale lotteries for fundraising purposes at pubs, clubs, concerts and other events. In addition to this, the promoter was required abide by certain conditions, including that all tickets must be sold at the event and the result must be drawn at the event.

Although some conditions remain, a few have been relaxed to make it easier to use small scale lotteries in relation to fundraising activities:

• incidental lotteries can now be held at both non-commercial and commercial events; and

• it is no longer necessary to draw and announce the winner at the event. The draw can take place after the event.

Private lotteries 

There are three types of permitted private lotteries - private society, work and residents' lotteries. Private lotteries are also subject to certain conditions.

Previously private society lotteries could only raise funds for the purpose for which the society was conducted.  This condition has now been relaxed to allow private society lotteries to be also promoted for any charitable or non-commercial purpose.

Work and residents' lotteries could not be used for fundraising purposes because a condition of operating these lotteries was that all of the proceeds were used for prizes or the cost of operating the lottery. For example, an office Grand National sweepstake could not be used to raise money for charity. All entry fees had to be used for the prize fund/cost of operating the sweepstake. This condition has now been relaxed to allow work and residents' lotteries to be promoted for wholly other than for the purpose of private gain, or organised in such a way that no profits are made.

In addition to these relaxations, private lotteries are also no longer under an obligation to provide certain information on the related lottery tickets. Previously, promoters were required to state their name and address, eligibility requirements, the fact that tickets were non-transferable and the price of a ticket.

Hopefully, these changes to legislation will be good news for charities and good causes in maximizing fundraising efforts and allowing businesses, organisations and individuals the ability to donate through incidental non-commercial, private society, work and residents’ lotteries to the charity of their choice.