SCVO response to UK Government

05 September 2018

This paper is now: Published

Our Position

SCVO supports the society lottery annual sales limit being increased to £100 million.
We hold that the society lotteries and the National Lottery complement each other in raising funds to good causes, and that the analysis by the Gambling Commission in particular, provides confidence in this area.
SCVO shares concerns about the risks of gambling to mental health, but accepts that the proposed changes will not impact on protecting vulnerable people.
SCVO supports raising the draw limit to £10 million, including in the scenario where the Government cap the maximum prize at £500,000.
SCVO supports raising the small society lottery limits to £40k per draw and £500k per year.
SCVO encourages the UK Government to implement proposed changes by January 2019
SCVO backs the proposal for a £1m maximum prize.

Our Response

This is SCVO’s response to the UK Government’s proposed changes to rules that govern Society lotteries.

The UK Parliament’s Culture, Media and Sport Select Committee held an inquiry into society lottery reform in 2015. The Government is now consulting on their proposals for society lottery reform, including sales and price limits and proposing significant lifting of the current caps in place.

Our response had been openly developed with Scottish third sector input at https://opengovpioneers.miraheze.org/wiki/UK_Society_Lotteries. Please visit that page to review the detailed analysis informing our position.

The annual sales limit

The UK Government’s preferred option is to increase the society lottery annual sales limit to £100 million. We note that:

  • The current society lottery annual sales limit is set at £10 million.
  • This limit has resulted in additional administration costs from charity fundraising by society lotteries, meaning that some funds which could otherwise go to good causes are used to pay these costs.
  • This limit also interacts with player numbers that some society lotteries are able to have fewer draws each year with the result that the funds they generate for good causes is decreasing.
  • This limit also means that society lotteries which are at or near the limit cannot raise more funds for good causes from their society lottery. This cap on charity fundraising, at a time when other income streams are under pressure, is unhelpful and ultimately results in charitable causes being unable to fund work that they could otherwise undertake.

Therefore, SCVO supports the society lottery annual sales limit being increased to £100 million.

Competition with National Lottery

We have reflected on the argument that charity fundraising by society lotteries complements charity fundraising by the National Lottery. We note that:

  • National lottery funding agents have expressed concerns about the impact of changes to thresholds for society lotteries on the potential income to good causes via the National Lottery. Two key factors that are important for third sector, is that the overall funding for sector good causes increases, and that the ‘no strings attached’ independent grant nature of this source of funding is secure.
  • The ideal situation is for funds to good causes from the National Lottery to grow alongside funds to good causes from society lotteries. Gambling Commission official statistics show that this is what has happened during the last decade.
  • In its advice to Government, the Gambling Commission, the regulator of both the National Lottery and society lotteries, make the point that their economic modelling of the factors influencing National Lottery income finds that society lotteries are not a significant factor. For example, on page 3 of its ‘Review of Society Lottery advice’ document, provided to Government in October 2017 and published on 29 June 2018, it says “there was no statistically significant effect of society lotteries affecting National Lottery sales”.

Therefore, we hold that the society lotteries and the National Lottery complement each other in raising funds to good causes, and that the analysis by the Gambling Commission in particular, provides confidence in this area.

Risks of gambling and mental health

It is important that any changes to society lottery legislation do not impact on vulnerable people. We note that:

  • The link between gambling addiction and mental health has been a growing concern for charities across the UK. This has implications for any changes to lottery policy.
  • The Gambling Commission, in their advice to the UK Government on society lotteries, published on 29 June, states that: “The Commission remains of the view that removing the limits placed on the proceeds and prizes of large society lotteries poses no regulatory risks to the objectives of the Gambling Act 2005.” The advice also notes that “In general society lotteries are considered to be low risk in terms of the licensing objectives set out in the Act.”

Therefore, SCVO shares concerns about the risks of gambling to mental health but accepts that the proposed changes will not impact on protecting vulnerable people.

Raising the society lottery draw limit and decoupling maximum prize from the per-draw sales limit

The UK Government propose increasing the per draw sales limit to £5 million, but also give the option of increasing it to £10 million. The UK Government also ask a consultation question about decoupling the per draw limit from the maximum prize.

  • There is concern that without a significant rise in the limit additional administration costs will accrue, using funds which could otherwise go to good causes.
  • The situation is complicated because under the Gambling Act, the maximum prize from a society lottery is 10% of the value of the tickets in a draw. This means that increasing the draw limit to help avoid administration costs could also have the impact of increasing the maximum prize from society lotteries.
  • There seems to be a psychological barrier to crossing the £1m prize limit barrier. However, this is still substantially lower than average top prizes for the Lotto (£8.73m) or Euromillions (£51.2m).

Therefore, even if the maximum prize is capped at a lower amount (e.g. £500k), SCVO supports raising the draw limit to £10 million, and would support decoupling if required. However, SCVO is relaxed about a £1m maximum prize, as it is still substantially lower than other lottery options.

Easing Small society lotteries limits

The consultation asks for views on increasing the thresholds on small society lotteries. We note that:

  • Small society lottery limits are set at a lower level than larger society lottery, as a trade-off for reduced regulation and bureaucracy for scrutiny. This makes it easier for smaller society lotteries to be viable, while keeping the enhanced scrutiny on larger society lottery operators.
  • The Lotteries Council and the Hospice Lotteries Association back increasing the small society lottery per draw sales limit to £40k and the annual sales limit to £500k, in order to support smaller charities which run lotteries (eg hospices and air ambulances etc) and help them reduce administration costs.

Therefore, SCVO supports raising the small society lottery limits to £40k per draw and £500k per year.

Timescales for implementation of changes

There is concern that slow implementation of proposed changes will result in additional administration cost accruing for some society lotteries.

We note that numerous society lotteries are in the position that unless the Government implements its proposed changes by early 2019, further significant administrative challenges and costs will be incurred which will simply eat into good causes.

Therefore, SCVO encourages the UK Government to implement proposed changes by January 2019.

About us

The Scottish Council for Voluntary Organisations (SCVO) is the national body representing the third sector.There are over 45,000 voluntary organisations in Scotland involving around 138,000 paid staff and approximately 1.3 million volunteers. The sector manages an income of £5.3 billion.

SCVO works in partnership with the third sector in Scotland to advance our shared values and interests. We have over 1,900 members who range from individuals and grassroots groups, to Scotland-wide organisations and intermediary bodies.

As the only inclusive representative umbrella organisation for the sector SCVO:

  • has the largest Scotland-wide membership from the sector – our 1,900 members include charities, community groups, social enterprises and voluntary organisations of all shapes and sizes
  • our governance and membership structures are democratic and accountable – with an elected board and policy committee from the sector, we are managed by the sector, for the sector
  • brings together organisations and networks connecting across the whole of Scotland
  • SCVO works to support people to take voluntary action to help themselves and others, and to bring about social change.
  • Further details about SCVO can be found at www.scvo.org.uk.

Contact

Ruchir Shah

Scottish Council for Voluntary Organisations,

Mansfield Traquair Centre,

15 Mansfield Place, Edinburgh EH3 6BB

Email: politicalengagement@scvo.org.uk

Tel: 0131 474 8000

Web: www.scvo.org.uk