Material developments announced for society lotteries and the National Lottery

In two very material developments affecting lottery operators, the Government has announced:

  • a consultation on plans to increase to 18 the minimum age to play National Lottery scratchcards and online instant win games, prompted by a desire to protect vulnerable young people from the potential risks of gambling related harm, although the Government maintains “these remain very low on all National Lottery games”, and
  • that, for the first time in a decade, it will:
    • raise the annual sales limit for society lotteries (from £10 million to £50 million) in order to increase the money they can raise for good causes, and
    • increase the maximum per draw prize (from £400,000 to £500,000).
Commenting on both announcements, Mims Davies is quoted on the website as saying:

I am immensely proud of the exceptional role that the National Lottery has played in Britain over the past 25 years. We want to protect its special place and these changes strike the right balance to ensure that both the National Lottery and society lotteries can thrive. The National Lottery raises vast sums for good causes, and society lotteries play a vital role in supporting local charities and grassroots organisations. These measures will ensure we create the best landscape so people across our communities can continue to benefit. But we also need to make sure that the National Lottery is fair and safe. That is why we are looking to raise the minimum age for instant win games so children and young people are protected. We are open to all feedback on changes to this and all of the various lottery products.

We comment on each announcement below.

Minimum age to play National Lottery scratchcards and online instant win games

The consultation on the minimum age for playing National Lottery games will last 12 weeks from 16 July 2019 until 08 October 2019. The consultation paper can be downloaded below and responses can be submitted via an online survey accessible here. The Department for Digital, Culture, Media & Sport (“DCMS”) is inviting feedback from industry, interested stakeholders and the public on this consultation but has made it clear that it is unable to collect responses from those under the age of 16.

In terms of background:

  • The current licence to run the National Lottery is due to expire in 2023. The Gambling Commission has begun work to design and run a competition to award the next National Lottery Licence (as we have reported here). DCMS considers that the start of a new licence period is “an opportune time to ensure that the policy framework for the National Lottery is fit for the future”.
  • The minimum age to play the National Lottery was set at 16 in 1994. National Lottery games are split into two categories: draw-based games such as Lotto and EuroMillions; and instant win games which consists of scratchcards and online instant win games. Draw-based and instant win games have the same minimum age of 16 to play.
  • Since the award of the third National Lottery licence in 2009, there have been changes to the landscape in which the National Lottery sits. There has been a significant growth in online gambling in general and major new online and mobile platforms have revolutionised the way players interact with the National Lottery games. In addition to technological changes, the relative proportion and total sales revenue of instant win games, especially scratchcards, has increased. DCMS says that “this raises the question whether the availability of all National Lottery games to those under 18 remains appropriate”.

DCMS is consulting on the following 3 options:

  • Option 1: Do nothing, retain the minimum age of 16 for all National Lottery games
  • Option 2: Raise the minimum age to 18 for National Lottery instant win games (i.e. scratchcards and online instant win games)
  • Option 3: Raise the minimum age to 18 for all National Lottery games.

Given concerns about under-age purchases of National Lottery scratch cards expressed by the Gambling Commission in its Young People and Gambling report 2018 (published in November 2018), gambling operators in all sectors other than the National Lottery will be interested to read the following extract from the DCMS consultation paper under the heading “Risk of harm from online instant win games”:

3.20.  Online play is account based which means the National Lottery operator has access to player data which can be used to identify potentially harmful behaviour and to target interventions which aim to reduce the risk of harm.

3.21.  With regard to online instant win games, the National Lottery operator uses an analytical tool which considers various measures associated with at risk play (such as session length, number and frequency of sessions and total losses) to evaluate player behaviour by risk profile and target interventions to promote positive changes in behaviour.

3.22.  Data provided by the National Lottery operator for 2018/19 shows that on average there were 13 unique players aged 16 and 17 who played online instant win games and exhibited signs of problem or at-risk play. This is approximately 2.9% of the average number of active 16 and 17 year old players in this period.

3.23.  The data does not provide evidence of a significant risk of gambling related harm for 16 and 17 year olds from playing online instant win games. Of the very few 16 and 17 year olds that are playing online instant win games there is a small proportion of these players that are exhibiting signs of problem or at-risk play. These statistics cannot be compared with the rates from the health survey data for other National Lottery games or commercial gambling products, as the data provided by the online analytics model is not comparable to markers of low and moderate risk gambling or problem gambling.

Society lottery limits

We reported in June 2018 on the DCMS consultation on proposed changes to the amount of money that society lotteries can raise for good causes. The maximum draw prize increase now announced – from its current limit of £400,000 to £500,000 – is in line with the recommendation within that consultation. However, at £50 million, the increased maximum amount that society lotteries can raise for good causes is just half of that recommended in the 2018 consultation, i.e. £100 million per year.

The reason for this is explained by Mims Davies MP, Minister for Sport and Civil Society in her foreword to the Government response to the consultation on society lottery reform (that can also be downloaded below), where she says:

Having considered the evidence, I am sympathetic to calls from the largest society lotteries to raise the annual sales limit even further. However this is a significant increase, and I am concerned that the regulatory framework is not currently sufficiently rigorous for societies raising funds at this scale. It is therefore my ambition to launch a further consultation looking at giving large society lotteries the choice of a £50m or £100m annual licence, with regulatory requirements in proportion to their size. In particular I am keen to consider potential additional requirements for these largest societies, with a particular focus on the information provided to consumers and the amount returned to good causes.

Clara Govier, managing director of the People’s Postcode Lottery, is reported as saying.

A £50m limit is a very welcome and highly significant milestone on our journey towards a truly transformative £100m limit. The time for action is now and we’d like to see the £50m limit introduced as a priority. We know there is strong support for this change from charities. Our message to government has always been ‘let us do more’. I am delighted that our work, and the minister’s decision, will allow us to do exactly that.

Notwithstanding opposition by the National Lottery sector and its beneficiaries to any increase in the annual sales limit for society lotteries due to concerns about the impact this may have on the National Lottery and returns to good causes, DCMS states that “in line with advice received by the Gambling Commission, we consider that the growth of society lotteries has not had a significant negative impact on the National Lottery to date. We believe that the package of reforms will not result in a negative impact on the National Lottery, and will support our aim that the two sectors remain distinct. Close monitoring by the Gambling Commission will identify any potential issues should they arise”.

In terms of “next steps”, the Government hopes to lay the draft legislation introducing the increased limits as early as possible in the autumn and, subject to Parliamentary approval, for these new limits to come into effect in 2020. It also states in its response document:

It is important that society lotteries demonstrate the highest levels of transparency, and in addition to the changes outlined in this document, the Gambling Commission plan to consult on measures to tighten the licensing framework for society lotteries, looking in particular at the information provided to players on how the proceeds of a lottery are used (including publishing breakdowns of where all money is spent), and the good causes that benefit. We will also be looking further to consider how best to increase transparency in relation to executive pay and will seek further advice from the Gambling Commission. We will look to legislate if necessary if these measures do not go far enough.