The Gambling Commission recently issued conclusions on new transparency requirements following a sector consultation on proposed updates to the Licence Conditions and Codes of Practice (specific changes to Social Responsibility Code provisions). This will affect society lotteries (and the associated external lottery managers and charities) and in particular umbrella, branded or multiple society lotteries.
The updates manifest themselves in amended Social Responsibility Code provisions around certain pieces of information that must be made clear to consumers. The changes take effect on 4 April 2018.
In summarising the changes and policy, Commission Executive Director for Lotteries Sarah Gardner, said:-
“We want to make sure that consumers have as much information as possible to make informed choices about their gambling. In lotteries, we know that players are motivated by a range of things, particularly the chance to contribute to good causes, so it is only right that they understand what that means in practice.”
The key updates
Lottery proceeds Information
The Commission consulted on information provided on the proportion of proceeds forming the returns to good causes.
While acknowledging this is not the only relevant factor for consumers and the potential impact on new lotteries (where percentage returns might be lower in the initial period), the Commission considered it right for there to be a focus on transparency around this key indicator. It was also noted that in other charity situations this approach is taken. While not expressly mentioned, an example would be commercial participator arrangements (where e.g. X pence from the sale of a product is donated to a particular charity).
The Commission said of the update:-
“This will require operators to provide consumers with information about the proportion of lottery proceeds (tickets sales) returned to good causes… in a calendar year.”
“To clarify, we are expecting operators to display, in a timely manner, the proportion of lottery ticket sales (as a percentage) for the previous calendar year, returned as profit to the good cause… For society lotteries this is: total profit (amount returned to good cause) in a calendar year, divided by total proceeds (ticket sales) in a calendar year, multiplied by 100 to provide a percentage figure.”
Marketing of umbrella/single branded lotteries
The Commission also consulted on an update requiring umbrella/single branded lottery operators to make it clear to consumers which society lottery was being marketed and the consumer being asked to participate in.
The proposals and the resulting update will need to be considered by those operating a society lottery to ensure compliance in how marketing and other materials make clear which society lottery is involved and not just the overall umbrella branding.
The Commission said of the distinction between an umbrella brand and a society lottery that:
“[I]t remains important to ensure that the nature of these schemes is transparent to consumers. It must be clear to consumers that although there is a common brand, they are participating in individual society lotteries, and which lottery they are participating in. Therefore we have concluded that operators will be required to provide information about the promoting society clearly and relatively prominently in any marketing/advertising material.” (Our emphasis)
The resulting new Social Responsibility Code provision is worth setting out in full:-
“1 Where a number of society lotteries are promoted under one brand (also known as a branded lottery1), whether with an ELM or not, licensees must ensure that it is clear to consumers (or potential consumers), which society lotteries are being promoted.
2 The requirement in (1) must be made clear to consumers within any marketing communications, advertisements, promotions or any information surrounding the draw, winners and beneficiaries; and through any ticket documentation.
1 a scheme whereby multiple societies promote lotteries under a common brand name or image, either on rotation with other societies or as a regular occurrence for that single society.”
Annual and single draw limits / minimum return to good causes
The Commission noted consultation responses which called for increases to the limits on sizes of draws. Such restrictions are reasons for the use of umbrella branded lotteries. There was also comment from one respondent that the 20% minimum return to good causes was too low. The views being that increases to these thresholds might enhance transparency for consumers. The Commission said that these matters sat outwith this consultation.
The provisions take effect on 4 April 2018. Those operating society lotteries will need to review materials, marketing and advertising to ensure adherence to the updated information and transparency requirements.