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Private companies fundraising through lotteries

There are a number of ways that commercial private sector businesses can become involved in fundraising by promoting their own lotteries or by supporting lotteries promoted by charities and other good causes.

The law on lotteries is set out in the Gambling Act 2005, it specifies that lotteries cannot be run for private or commercial gain they can only be run to raise funds to support good causes. The Act defines different types of lotteries, the requirements for those lotteries and who can run them.

Set up a non-commercial society

In order for an organisation to promote a society lottery they must be a non-commercial society and - dependant on the size of the lottery (ticket sales) - they must obtain either a society lottery licence issued by the Gambling Commission or hold a small society lottery registration with their local authority.

A commercial company could potentially promote a lottery by setting up a separate non-commercial society with the objective of raising funds for good causes.

Obtain an External Lottery Manager’s (ELM) licence

The Act permits licensed external lottery managers (ELMs) to promote lotteries on behalf of non-commercial societies. Most ELMs are private commercial businesses such as professional lottery promoters, fundraisers or direct mail companies who are paid a fee for the services they provide to society lotteries.

ELMs promoting a lottery on behalf of a licensed society lottery must themselves hold a lottery operating licence issued by the Commission.

Applications for an ELM can be made through e-Services.

Organise an incidental lottery

Businesses who organise events such as trade fairs and other corporate or private events or pubs and clubs and other businesses and organisations who run various events on their premises could run an ‘incidental’ lottery at the event to raise funds for a charity or other good cause without the need for a licence or other specific permission.

The event itself does not need to be non-commercial but the lottery must be for non-commercial purposes.

There are some basic rules for incidental lotteries at events set out in the Act, including those that restrict ticket sales to the event and prohibit a rollover of the prize to another lottery.

Further information about the legal requirements can be found in our advice note on organising small lotteries.

Organise a work lottery

Businesses (private or public) can run a lottery on their premises among their employees and donate part of the funds collected to a charity or other good cause without the need for a licence or other specific permission.

There are some basic rules for work place lotteries set out in the Act including those that restrict participation to employees on the premises at a single site and prohibit a rollover of the prize fund to another lottery.

A commercial business can operate a customer lottery but that type of lottery cannot be run to raise funds for good causes. Further information can be found in our advice note on organising small lotteries

Act as a lottery ticket retailer

A commercial business could sell society lottery tickets on behalf of a licensed or registered society at their business premises, including in any retail shops.

However, that function would have to be conducted with the agreement of the licensed society and under the policies and procedures of that society.

The society must retain overall management control and responsibility for the lottery at all times. 

Donate prizes or funds to a lottery

A company can donate prizes or funds to the promoter of a lottery to cover the expenses, such as the costs of printing tickets, marketing and advertising etc. 

There are rules around the value of large prizes, and any prize (regardless of whether it is purchased by the society or donated to them) with a value in excess of £25,000 cannot be worth more than 10% of the total ticket sales. Companies need to be mindful of this if they are donating a high-value item, such as a car, as a prize in a lottery.

 

If you are organising a small society lottery it is your responsibility to ensure you are compliant with the law. If in doubt, you should seek legal advice.

Also see

Organising small lotteries

Advice on lotteries that do not require a licence or registration

238 KB Download

Running a lottery

A quick guide to running a lottery

416 KB Download