A British government research project has concluded that a potential increase in the sales ticket limit on society lotteries would greatly benefit these operations, but could prove more detrimental to the National Lottery.
Given the declining ticket sales the National Lottery has recorded year-over-year, this could be worrying for the lottery and its operator, multinational group Allwyn, which is currently in its second year of a 10 year licence.
As it stands, society lotteries are currently subject to a ticket sales limit of £50m. The government is evaluating whether this should be raised to £100m, although currently the People’s Postcode Lottery (PPL) is the only one which comes close to exceeding the £50m limit.
Society lotteries have been calling for this limit to be raised for some time. The government now seems open to hearing these calls out, either by doubling the limit or scrapping it entirely, though it has noted that the National Lottery may suffer.
What would society lotteries gain?….
The research, conducted by DCMS, has identified three potential scenarios as a result of raising the ticket sales limit from £50m to £100m – all three consider this premise, with non envisioning a complete removal of the limit.
The first, called the ‘bassline scenario’, sees a doubling of the limit but no other regulatory changes. In this scenario, the single draw sales limit of £5m, PPL’s typical maximum prize of £400,000, and its operational model of 12 monthly draws and 20 society lottery licences, would remain.
DCMS believes this would lead to PPL ticket sales rising by £51m annually and player/subscription numbers increasing 382,000. One of the main things holding PPL back under the current £50m limit, it is believed, is the fact it has to keep ticket prices lower to avoid breaching the limit.
These revenue gains would in turn lead to a net increase in total good causes funding of £16m, according to the search. These figures are mirrored in the second and third scenarios, with the second seeing PPL ticket sales grow £210m and good causes funding by £82m and the third seeing ticket sales up £426m and good causes funding £126m.
All three scenarios are, undoubtedly, good news for society lotteries. The relaxation of regulations and increasing of the limit would enable lotteries to increase ticket sales and prices, and offer larger prizes as well.
The research found that lottery consumers are, for the most part, influenced by a desire to win prizes. While society lottery customers are more motivated by the idea of returning to good causes than National Lottery customers, the prospect of winning bigger prizes from playing, say, the PPL or the Health Lottery, is certainly a good marketing win for society lotteries.
The research estimates that 40% of current society lottery players would spend more and 22% of people who do not currently play society lotteries would begin playing. In scenario two in particular, the research estimates that if the PPL maxim prize was doubled to £800,000, 15% of National Lottery-only customers and 10% of non-lottery players would start playing the PPL.
…and what could the National Lottery lose?
Not everyone is a winner with these proposed society lottery changes, however. The research does note that the National Lottery would likely suffer as a result of the charity lottery sales cap being raised.
In the first scenario, the National Lottery would suffer with an estimated drop in ticket sales of $25m annually and subsequent contributions to good causes from these sales falling by £5m.
The second and third scenarios, meanwhile, estimate that National Lottery ticket sales would drop by £14m and £123m respectively, largely due to National Lottery customers migrating over to the Postcode Lottery. Good cause contributions from the National Lottery would fall by either £3m or £25m as a result.
This does beg the question as to why the government is considering this, if the National Lottery stands so much to lose. The answer may lie in the fact that National Lottery ticket sales have been falling for the past few years, having reached a peak of £8.39bn in 2020/21, dropping to £7.8bn by 2023/24.
Returns to good causes obviously fell as a result of this, and the contributions the National Lottery makes to good causes, charities and grassroots sports was raised repeatedly during the last licence tender – the one which saw Allwyn take over from Camelot UK as National Lottery operator.
Allwyn has since set itself a solid target of doubling National Lottery good causes funds to £1.6bn by 2026. However, the government may be looking to charity lotteries as a way of filling the gap in good causes funds left by the drops in National Lottery sales over recent years.