Not-for-profit raffles: Do you need a lottery licence?

Raffles are a common and often effective way to raise additional funds for your charitable organisation or cause.  A less known fact however, is that the gambling commission defines raffles, tombola’s, sweepstake’s as lotteries. This brings distinct regulations that affect the type of lottery you can run, the lottery license which may be required, your ability to give away prizes and how any money made can be spent. Here’s our guidance on organising small lotteries/ running a raffle for charity.

What does the Gambling Commission define as a lottery?

The Gambling Commission determines there is three essential elements to a lottery, these being:

• Payment is required to enter the game.
• There must be a minimum of one prize.
• Prizes are awarded purely on chance.

A standard small society lottery is most often a charity raffle in which players purchase a ticket with a number on, the tickets are then randomly drawn and the individual whose ticket matches the drawn ticket wins a prize.

A slightly different version to the standard raffle is a sweepstake. In this instance for example the participants pay to randomly draw a team in a sporting event. The person whose randomly drawn team wins the event, will win a prize.

In addition to the three essential elements of a lottery listed above, all lotteries (with the exception of incidental lotteries) have another element In common. All tickets must be the same price, that way each participant has an equal chance of winning based on the same outlay. As mentioned above, incidental lotteries are the one exception to these raffle rules.

The distinct types of lottery as stated under the Gambling Act 2005

The gambling commission has divided the types of lotteries into eight distinct categories, each with its own rules and limits, check out a brief description of the categories down below:

Lotteries that require permission

Small society lotteries:

The society in question must be exclusively for non-commercial purposes, common examples of groups organising small lotteries include sports groups, charities and cultural organisations.

For lotteries of this type there is a £20,000 top limit for ticket sales. In addition tickets must display the name of the society or local authority, the price of the ticket, the name/address of the organiser and the date the draw will be held.

Large society lotteries:

This is essentially the same as for small society lotteries except a minimum of £20,000 in ticket sales in required.

Local authority lotteries:

These are lotteries run a local authority, normally as a method of combating the expenditure it routinely incurs.

Lotteries that do not require permission

Private society lotteries – These must raise funds In order to support a good cause or for the purposes for which the society is conducted.

Work Lotteries – Only for colleagues who work at the same single set of premises. These must either; make no profit, meaning proceeds are used for reasonable expenses/ prizes or must be raising funds for a charity or good cause.

Residents lotteries – Similar to the above but for individuals who live on the same single set of premises.

Customer lotteries – These must be run by a business, within its own premises and for its own customers. This type of lottery is not allowed to make a profit and so is unsuitable for fundraising. No prize can be more than £50.

Incidental lotteries – These can be held at commercial events and non-commercial events and must always be for a charitable purpose or other good cause. They can never be run for private or commercial gain. All tickets must be sold at the location/time of event, however the draw can occur after the event has ended.  No more than £100 can be deducted for expenses and no more than £500 spent on prizes.

So what about when a licence is required?

As mentioned above a licence is only required for: Small society lotteries, large society lotteries & local authority lotteries and each can be obtained in distinct ways each with different rules and regulations.

Small society lottery Licence:

A small society lottery licence can be obtained through your local authority (You can find your local authority here if you are unsure). You will be required to complete a registration form and return it to your local authority office.

So what does a small society lottery licence cost? Licences of this type come with an initial registration fee of £40 and an annual fee of £20.

Large society lottery Licence:

A large society lotteries licence, unlike a small society lottery licence has to be obtained through the gambling commission directly, further information on how this can be achieved is available here.

Local Authority Lottery Licence:

All local authority lotteries must be licensed by the Gambling commission as with large society lotteries. Full information on the rules, regulations and how to apply for a licence are available here.

Additional Legal Requirements

Once your completed running a raffle/ lottery for charity, a submission must be made to the local council within three months of the draw. In return they’ll send you a template requesting further information, including;

• Full details of the draw(s), including date of sale(s), date of draw(s) and the arrangements for prizes.
• The proceeds of the draw(s).
• The amounts deducted in respect of prizes.
• The amounts deducted in respect of costs incurred of running the draw(s).
• Any amount applied to a purpose for which the promoting society is conducted.
• Expenses that were paid for other than by deduction from the proceeds.

Planning on Running A Charity Raffle / Organising small lotteries? We can help!

Its important to remember that should something go wrong, your organisation could be liable for any damage caused or regulations broken. If you’re planning on running a charity raffle or organising small lotteries, find out how you can help protect yourself, your volunteers and your ability to trade.

Can’t get enough? Check out another of our charity/ nonprofit posts:

• Top 5 charity fraud scams posing a threat in 2019
• How to attract business sponsorship as a large charity
• Donate while you shop, how your charity can maximise donations

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