The Lotteries Council, a trade association representing the UK’s various non-state lottery sectors, is calling for prize draws like Omaze and Raffle House to be covered under the same regulatory remit as charity lotteries.
A recent report published by the Council argues that the charity lotteries, which it states raise over £460m for various causes annually, remain subject to heavy regulation despite being classified as low risk in terms of problem gambling.
The council argues that prize draws in contrast are not subject to the same level of regulatory scrutiny despite similarities between the two – the main similarity being that customers pay to participate in a randomly selected draw and may win a prize as a result.
Instead of cash prizes, prize draws like Omaze and Raffle House offer homes as prizes, sometimes ones worth millions in value. The Lotteries Council sees similarity between the two types of prizes due to the value involved, but adds that charity lotteries make a much greater societal contribution.
The Council asserts that for every £100m made in revenue by charity lotteries, on average £47.9m is returned to good causes. In contrast, Omaze contributes £17m and Raffle House contributes £10m, and the Council believes that this provides a solid rationale to ‘level the playing field’ between the two from a regulatory standpoint.
“Charity lotteries have established themselves as a vital component of Britain’s charity funding mix,” said Wendy Morton MP, the Shadow Minister for Foreign Affairs, in a foreword to the Lotteries Council report.
“They have proven to be especially resilient income streams over the past half-decade, despite wider economic challenges and a global pandemic. However, the recent growth in Britain of large-scale commercial prize draws, largely indistinguishable from charity lotteries, represents a growing threat.
“Charity lotteries have always been heavily regulated to avoid challenging the monopoly status of the National Lottery, while prize draws, which historically have been seen as something different, are subject to no gambling regulation.”
There is no playing field to level, says Raffle House
Charity lotteries’ frustrations with the extent of prize draws and the perceived regulatory disparity between the two are nothing new. These concerns were raised by charity lotteries during the review of the 2005 Gambling Act, which had its own conclusions about the situation.
Speaking to Lottery Daily shortly after the review publication, Lebby Eyres, then CEO of one of Britain’s largest charity lotteries, the Health Lottery, welcomed the review’s recommendation that the government explore how to increase regulation on prize draws.
However, with the topic now re-raised, prize draws are also having their say. In comments shared with Lottery Daily, James Mieville, Executive Director of Raffle House, argues that prize draws and charity lotteries are not compatible products.
“The Lotteries Council is asking the government to ‘level the playing field’ between charity lotteries and prize draws, but these are two different products,” he said.
Raffle House has also taken umbrage with the Lotteries Council’s assertions that prize draws fall under the regulatory definition of gambling via lottery. This includes the regulatory stipulation that ‘in order to be a lottery, payment must be required to participate’.
The Lotteries Council has drawn a number of comparisons between charity lotteries and prize draws. Charity lotteries are required to have a licence with the Gambling Commission, it states, while prize draws do not.
Charity lotteries are also subject to limits on individual draw sales, annual sales and prize values, and a requirement that a minimum of 20% of turnover must be donated to charity, while prize draws are not.
“If there is a shift from society lotteries to unregulated prize draws, returns to good causes will inevitably decline,” said Tony Vick, Chair of the Lotteries Council. “Million-pound prize draws represent the thin end of the wedge in lottery-based civil society fundraising.
“Consider that charity lotteries, on average, return 45% of every ticket sale to their chosen good causes. By contrast, large commercial prize draws return to good causes (if they do so at all) at rates well below the statutory minimum required of a regulated charity lottery.”
Lastly, the Council also believes that public perception of prize draws has been skewed, and that for the most part the British public are unaware that prize draws like Omaze and Raffle House are what it calls ‘unregulated gambling products’. Again, Raffle House has disputed the validity of this criticism.
“It’s also worth noting that any company currently operating in the regulated gambling space could adapt its model to fall outside the Gambling Act 2005’s definition of gambling by offering a free entry option, as we do,” Mieville said.
“We fully comply with legislation related to operating under the free draw model and all of our competitions offer a free entry option that is displayed as prominently as the paid entry option, in line with the Gambling Act 2005.
“We believe this eliminates any potential for players to be misled into thinking we are a regulated gambling product or a lottery, as the report produced for the Lotteries Council suggests may be the case.”
Regardless of the difference of opinions between the Lotteries Council and prize draws like Raffle House on regulatory disparities, the government does seem to be in the camp of the former according to the Gambling Act review White Paper.
However, with more pressing matters like betting and gaming marketing and promotions, bonuses, addressing financial vulnerability and the relationship between betting and sports, it is unlikely that the perceived regulatory disparity between charity lotteries and prize draws will take precedence any time soon.