There are many reasons to start your own lottery business that comes with many positives. The UK has strict laws regarding lotteries and the industry is heavily regulated by the Gambling Commission. Lotteries aren’t just a good way to make you a profit, it can also help generate money for charitable causes or local community interest group of your choice. It won’t be an easy thing to do but here are some ideas and information on how to get started.
TYPES OF LICENSES AND LOTTERIES
There are many different types of lotteries, some lotteries you will need a license for and some you won’t.
HERE ARE FIVE TYPES OF LOTTERIES THAT ARE EXEMPT FROM LICENSING: (in all these cases no rollovers are allowed)
- Work Lotteries- Are for colleagues who work on the same premises. They must be a non-profit and raise money for a charity or good cause.
- Residents Lotteries- Only residents living in a single set premises. This also has to be a non-profit and raise money for a good cause.
- Private Society Lotteries- Must raise money to support their work, a good cause or charity.
- Incidental Lotteries- This must not be for commercial gain and take place at events like school fetes to raise money for good causes or charity. Tickets are sold at the event only, with a limit of £500 spent on prizes and £100 deducted for expenses.
- Customer Lotteries- Must be run by a business on its premises for its customers only with a £50 limit per prize.
HERE ARE FOUR TYPES OF LOTTERIES THAT NEED AN OPERATING LICENSE FROM THE GAMBLING COMMISSION:
- The National Lottery- The UK’s main lottery has been running since 1994 and is covered by its own legislation and regulated by the National Lottery Commission. On average, the National Lottery raises over £30 million per week for its good causes.
- Small Society Lotteries- Needs to be registered with local authority and the ticket sales for these lotteries must not exceed £20,000 per lottery, or £250,000 per year. In theses lotteries, the maximum prize limit is £25,000.
- Large Society Lotteries- Must generate a minimum of £20,000 in ticket sales per lottery, or £250,000 per year. They need a license from the Gambling Commision and should give at least 20% of their revenue to sport, culture or charitable causes. Examples include the People’s Postcode Lottery and the Health Lottery, which gives at least 20p from every £1 ticket sale to health-related projects across the UK.
- Local Authority Lotteries- Will also need a license from the Gambling Commission and are run by a local authority that can use the net profits of the lottery to help with its running costs. The maximum prize limit is £200,000 per lottery.
THE REGULATIONS FOR SETTING UP A LOTTERY BUSINESS
The UK Lottery industry is strictly regulated by the Gambling Commission and laws set out in The Gambling Act 2005. One of the most important stipulations in the Gambling Act is that all society and local authority Lotteries must give at least 20% of their proceeds to fundraising. The remaining 80% can be used for expenses and prizes. If you run a society of local authority lottery, you must follow extra rules set out in the Gambling Act. You must include that all players have to be at least 16 years old and tickets aren’t allowed to be sold on the streets. You will have to make sure each ticket should list the following information: * Name of the society/authority, * Ticket price, * Name and address of the organiser, * Date of draw. If the lottery can be played remotely, via the internet or telephone, the large society and local authority lotteries must also get a remote operating license from the Gambling Commision. Lotteries can also choose to employ an External Lottery Manager to run the lottery, but to do this they must need a Lottery Managers Operating License.
DEFINITION OF A LOTTERY
A lottery is defined as something that players pay the same price to enter and has at least one prize that’s allocated through a process of pure chance. The prize is awarded purely by chance, such as in a raffle, sweepstakes or tombola.
Lotteries can also be easily confused with competitions the difference that separates them is a skills test. If players have to rely on knowledge or skill, by simply answering a question or to enter a draw for instance, this is simply classed as a competition and operates outside the Gambling Act 2005.
HOW TO SET UP YOUR OWN LOTTERY BUSINESS
Your first step to set up your own lottery business is if you need a operating licence and if you do apply for one through the Gambling Commission. If you setting up a small society lottery you will need to register through your local authority in the area where your main office is based. Make sure to be aware that if your lottery can either be played remotely or via the internet you will need to get hold of a remote operating license if your plan is to run a large or local authority lottery.
Consider these points when designing your society or authority lottery!
- At least 20% of your proceeds must go to fundraising.
- All players must be 16 or over.
- Tickets are not allowed to be sold on the streets.
- You must submit regular financial reports.
- Tickets must have the name of the society, ticket price, name and address of the organiser and date of the draw on each individual ticket.
- You may want to give proceeds to a charity partner or community interest group that can allocate funds to relevant projects.