Reminder of the Gambling Commissions concerns with regards lottery pull tab machines.
We are seeing increased offers from companies looking to hook into charities to donate their 20% obligation to. The GC have provided the following clarification on why this may not meet the legal requirements for a lottery operator, and may put your hospice in trouble if you support the work of these operators...
Where operators (both licensed and unlicensed) are offering to install lottery ticket vending machines in public houses on a ‘profit share’ basis this could be seen as committing lottery offences by promoting unlawful lotteries (contrary to section 258 of the Act) and/or misusing lottery profits (contrary to sections 260/261 of the Act).
This most often involves the absolute minimum of 20% being passed to the society, with the remaining profits (the surplus after the payment of prizes and reasonable expenses) being split between the machine supplier and the premises siting the machine. This is contrary to the Act, which states that it is a criminal offence under sections 260 and/or 261 to use lottery profits for a purpose other than that stated, i.e. the good cause printed on the ticket.
Gambling Act 2005
- Section 258(2) of the Act states that a person commits an offence if he promotes a lottery unless he holds an operating licence authorising the activity and acts in accordance with the terms and conditions of the licence.
- Section 260 (2) of the Act states: A person commits an offence if he uses any part of the profits of a lottery to which this section applies for a purpose other than that stated.
- Section 261 (2) of the Act states a person commits an offence if he uses any part of the profits of a lottery to which this section applies for a purpose other than one for which the lottery is permitted to be promoted in accordance with Schedule 11.
A person convicted of promoting an unlawful lottery could face a financial penalty or up to 51 weeks in prison.
Small society lotteries (registered with their local authority) or large society lotteries (licensed by the Commission) must not be promoted for commercial gain. The funds raised belong to the society and only “reasonable expenses” may be deducted, as dictated by the authorised promoter (the society).
All society lotteries, including those utilising lottery ticket vending machines, must be controlled and promoted by the society (under the terms of their small society lottery registration/Gambling Commission licence) or licensed ELM (acting under contract with the society) only.
A pub is acting as a retailer, the machine supplier as a service provider, and the society therefore remains responsible for the lottery. The society must ensure the publican has received the required age verification, self-exclusion, problem gambling and social responsibility training before the machines are sited. It is also imperative that there are policies and procedures in place which have been agreed between the society and publican for cash handling and the reconciliation and banking of ticket sales.
If these and the other conditions and legislation are not adhered to, it is likely that the machines and tickets are sited by third parties other than ELMs and the lottery being promoted/managed in an unlawful manner. A public house selling tickets for an unlawful lottery could be committing a criminal offence under the Act, as well as breaching their alcohol licence.
The Gambling Commission website has a suite of guidance concerning society lotteries and the use of lottery ticket vending machines including the following:
We have also issued guidance to local authorities through a number of bulletins – eg