I am repeating the following written ministerial statement made today in the other place by the Minister for Gambling and Heritage, my noble Friend Baroness Twycross:
Today I am updating the House on the Government position on the statutory limits for society lotteries and on prize draws. Alongside this, I am publishing independent research that the Government commissioned on both the lotteries and prize draw markets.
Society lotteries provide valuable funding for good causes across the country and are required to give a minimum of 20% of proceeds to good causes. The latest data showed record sales for the society lottery sector of over £1 billion in 2023-24, an increase of nearly 12% on the previous year, of which £462 million went to good causes.
In 2020, the then Government increased the annual sales limit on society lotteries from £10 million to £50 million, in response to the challenges that many society lottery operators were facing to operate within the limit. Those reforms were intended to support the society lottery sector as a whole by providing significant headroom for further growth.
In December 2023, the previous Government committed to commissioning independent research to look at the scale of the society lotteries sector, the relationship between society lotteries and the National Lottery, and the impact of any future changes to the sales limit.
The report, published here, found that five operators now have annual sales over the previous £10 million limit, with the current annual sales limit of £50 million only impacting one operator, the People’s Postcode Lottery.
The research found that the current sales and prize limits on society lotteries are not a barrier to society lottery sector growth. Overall sector sales have increased by 27% from 2019-20 to 2023-24, and PPL sales by almost 30% over a similar period. Despite this significant level of growth, there has not been a corresponding growth in returns to good causes. Since 2021, sector prizes have increased by nearly 28%, and expenses by over 25%, but returns to good causes have grown by only 15%.
The research also found that increasing the annual sales limit to £100 million could have several impacts on the National Lottery, with:
a decrease in participation, with players being displaced to society lotteries (National Lottery sales could fall by between £25 million and £148 million); and
less money for National Lottery-funded good causes, which provide a vital source of income to lottery distributor bodies.
The research also found that there was a potential for an overall increase in funding to good causes, driven by higher returns to good causes by society lotteries outweighing losses to the National Lottery.
The Government want a lotteries sector centred on one national lottery—the National Lottery—while continuing to support the hundreds of wider society lotteries that exist. This model has worked successfully for the past 30 years and created the conditions for the National Lottery to flourish and support life-changing projects, alongside a thriving society lotteries sector.
Since it started, the National Lottery has raised over £50 billion for good causes, raising over £1.8 billion in 2023-24 alone. It supports communities in every UK postcode, including local initiatives, heritage sites, iconic institutions, grassroots sport and elite sport. It is a national institution that the Government are proud of and want to protect.
As the research sets out potential negative impacts of increasing the society lotteries limits on the National Lottery, and the current transition to the fourth national lottery licence, the Government have taken the decision not to make further changes to society lottery limits at this time.
Prize draws
I am also updating the House on the Government’s position on prize draws, which is recognised as a significant and growing market. This Government have made it clear that we want people who participate in prize draws to be confident that proportionate protections are in place.
Prize draws and competitions, also known as “free draws”, are products where the outcome, and therefore the allocation of prizes, is determined by chance, and where there is both a paid and free entry route for players to choose between. These prize draws do not currently require a licence under the Gambling Act 2005 because they offer a free entry route. Prize draws are a significant and growing market. It is estimated that the UK prize draw market is worth £1.3 billion annually, with 7.4 million adult participants and over 400 operators.
I am therefore pleased to announce that we will be introducing a voluntary code for prize draw operators later this year. This code will help provide a uniform approach across the sector to strengthen player protections, increase transparency and improve accountability of prize draw operators. My Department has worked closely with the sector over the past six months to start to develop this code. The work is also underpinned by the results of independent research, which the then Government commissioned in 2023, which looked at this growing market. I am grateful to London Economics for this excellent report, which for the first time gives some firm insights into this relatively new sector.
This approach allows us to take swift action collectively with the sector. Although prize draw operators do not currently require a licence under the Gambling Act 2005, as they offer a free entry route, the success of this code will dictate whether this Government decide to take further action, including legislation.
[HCWS743]