The Lotteries Council has published a report calling on the government to bring prize draws such as Omaze under similar regulations to those imposed on society lotteries.
A report by nfpResearch commissioned by the Lotteries Council warns that the recent rise in large prize draws could threaten the future viability of society lotteries, which must adhere to stricter gambling rules.
At present, charity lottery operators are restricted to each sell £50m of tickets a year and offer a maximum prize of £500,000 while giving at least 20% of their proceeds to good causes.
Meanwhile, prize draws Omaze and Raffle House advertise multimillion-pound houses as their top prizes while stating that 17% and 10% of their proceeds, respectively, will be donated to charity partners.
Despite the differences between prize draws and lotteries, researchers found that some members of the public were unaware that they were regulated differently.
The report urges the government to ease regulations on society lotteries and bring large scale prize draws under the Gambling Act, requiring them to give at least 20% of their proceeds to charities.
‘Unfairness’ of status quo
nfpResearch found that one in 10 people are aware that Omaze is an unregulated gambling product with more than a third of people believing it is regulated in the same way as charity lotteries.
Joe Saxton, nfpResearch consultant, told Civil Society: “Charity lotteries are probably one of the most restrictive parts of any bit of the charity sector.
“And in a time when money is so tight for charities, we need things that will help them raise money, and it costs nobody anything to deregulate charity lotteries.
“If you look 10 years from now, it's very hard to see why anybody would run a charity lottery when the price draws could do the same job.
“The danger is that people have an alternative in prize draws that have no regulations. Why wouldn't they just go and do that? Why would anyone run a charity lottery if they can do the same with no regulations and it's the same amount of money?”
Unless the government does something to fix the “unfairness” of the status quo, more people will shift to prize draws, Saxton said.
Meanwhile, Lotteries Council chair Tony Vick said in a statement: “If there is a shift from society lotteries to unregulated prize draws, returns to good causes will inevitably decline.
“Million-pound prize draws represent the ‘thin end of the wedge’ in lottery-based civil society fundraising. Consider that charity lotteries, on average, return 45% of every ticket sale to their chosen good causes.
“By contrast, large commercial prize draws return to good causes (if they do so at all) at rates well below the statutory minimum required of a regulated charity lottery.”
Raffle House: Report’s suggestions ‘would lead to less money going to the charities’
James Mieville, Raffle House’s executive director told Civil Society that his prize draw’s players understand that that it is not a society lottery and that regulations should not be tightened.
He said: “We believe the charities we support would suffer if the regulations that govern prize draws were changed, and indeed the report acknowledges this risk.
“The report also states that ‘evidence does not currently support the thesis that prize draws are yet supplanting charity lotteries in the scale of the sector’s fundraising’.
“In fact, evidence suggests charity lotteries are thriving – earlier this year Gambling Commission CEO Andrew Rhodes said large-scale society lottery sales had passed the £1bn mark for the first time.
“If charity lotteries are doing better than ever and there’s no evidence that prize draws are impacting lotteries’ fundraising, doesn’t it follow that we and other prize draw operators are simply providing additional funds for charities that desperately need them?
“Isn’t that something to be celebrated rather than shut down, particularly in light of the fact there’s no obligation for prize draw companies such as ours to make any contribution to charities; we do so out of choice.
“It’s highly likely that all of the policy suggestions set out in the report would lead to less money going to the charities currently supported by prize draws.”
Civil Society has asked Omaze to comment.
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