Preliminary research on legality of lottery model

2015-06-08 13:13:09 Monday… [Post moved from previous site]

Just had a conversation with a couple of guys at the Electoral Commission. Very helpful. I ran the basic model of the party past them and they had no immediate concerns. That Commission is apparently not interested in the mechanism by which the party is funded, only that donations or loans over a certain amount are declared properly. The fact that the Party will be funded partly by a lottery does not concern them. I since discovered that the Conservative Party runs its own lottery and raises a few million pounds each year that way.

However, there are strict rules about the running of lotteries in the UK, and to find out what those rules are I’ve been speaking to the Gambling Commission, and also to a few Local Authorities.

If the lottery has ticket sales of over £20,000 in any one draw, or else an aggregated annual ticket sale of over £250,000, then it counts as a (Large) Society Lottery, and needs to be licensed by the Gambling Authority. A licence from them costs between about £3,000 and £150,000 per year, depending on the level of ticket sales. If under those thresholds then it counts as a Small Society Lottery and licensing falls to the local Authority. A licence in that case needs to be applied for separately in each local Authority area at a cost of £40, and £20 for annual renewal. The ‘principal office’ of the organisation running the lottery has to have an address within that local Authority area. This in effect means that a national system of lotteries will probably be better run under a £3000+ Gambling Commission licence as there are hundreds of local authorities, and all those £40 fees are going to add up.

In short, running any kind of lottery is going to be expensive and bureaucratic. I want to call this party the Lottery Party, because random selection to positions of power is an integral part of the Party’s central principle. However, the purpose of the random selection process is not for people to win prizes of any cash value, but to give them the chance to take part in a democratic process. I feel that people should be given proper recompense for the time and effort they put in whilst sitting as Jurors on these Citizens’ Juries, so that no one is excluded due to their financial circumstances, and so that Jurors will take the role seriously, put the required effort in, and turn up to meetings. It seemed sensible to try to make the Juries self-financing by charging a small fee for entry into the pool from which the random selection would be made. But if that makes it a ‘lottery’ in the sense of the Gambling Act of 2005 then perhaps I should rethink the funding model. I could easily run it without the entrance fee, and just request a donation instead to go towards an attendance allowance. As I understand it, it only becomes a lottery in the sense of the Gambling Act if the following three conditions are all met…

1. payment is required to participate
2. one or more prizes are awarded
3. those prizes are awarded by chance.

2015-06-08 15:49:38 …Ah, OK, it’s always worth just reading the actual legislation. I just read the relevant parts of the Gambling Act of 2005 (Section 14 and Schedule 2) and it seems an ‘arrangement’ is only deemed to be a ‘lottery’ if payment is required in order to take part. As long as there is a clearly offered alternative method of entry which does not involve payment but instead involves communication which is not more expensive or less convenient than paying, then payment is not required and therefore it is not a ‘lottery’ under the terms of the Act.

Whew! So I can easily arrange that. It will not technically then be a lottery in the legal sense. I had wanted it to be a lottery, pure and simple, but I’m sure I can still call it a lottery, as it still is a lottery in the dictionary sense, as the outcome is determined by random chance alone. I do want, if possible, to make the Citizens’ Juries self-funding.

OK, here we go…
Prize competitions and free draws: The requirements of the Gambling Act 2005

But whew! So complicated! That’s it for today I think.


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