HART COUNCIL LOTTERY
1 DECEMBER 2016 HART DISTRICT LOCAL AUTHORITY LOTTERY Report of: Corporate Strategy and Policy Development Manager/Head of Corporate Services Cabinet member: Councillor Ken Crookes, Finance and Economic Development 1 PURPOSE OF REPORT 1.1. The purpose of this report is to seek agreement to the establishment of a local authority lottery for Hart District that would support the local voluntary and community sector. 2 OFFICER RECOMMENDATION 2.1 That a Hart District Council run Lottery be introduced in 2017 to be known as the Hart Lottery; 2.2 That subject to due diligence, the Council works with Gatherwell, the external lottery management company behind Aylesbury Vale and Portsmouth lotteries, to deliver the Hart Lottery; 2.3 That the purpose of the lottery is to raise funds for local charities, voluntary organisations and good causes that benefit residents within Hart; 2.4 That the initial set up fee for year 1of £4,300 is sourced from reserves to initiate the lottery; 2.5 That the ongoing £1,000 annual licence and membership fees is assigned from ongoing lottery income streams; 2.6 That an annual marketing budget of up to £2,000 be allocated to the lottery (from ticket receipts) to ensure ongoing lottery awareness and promotion to drive ticket sales and to promote the lottery amongst good causes; 2.7 That two Council officers – the Head of Corporate Services and the Corporate Strategy and Policy Development Manager are nominated to be the personal licence holders; 2.8 That the Council hosts a launch event to promote the lottery – to include press, PR, and social media, as well as provide additional first draw prizes; and, 2.9 That delegated authority is given to the Portfolio holder for Finance and Economic Development to agree criteria for the inclusion of good causes and a policy and process for the allocation of the good causes central pot in conjunction with relevant officers PAPER G . 3 BACKGROUND 3.1 The establishment of a local authority lottery is a concept being explored by a number of local authorities across the country. At a time when there are increasing pressures on funding available to the voluntary and community sector they are being seen as a way of providing support to bring in additional funding. 3.2 Aylesbury Vale was the first to launch an online local authority lottery (Vale Lottery) in November 2015. This is run by Gatherwell, an External Lottery Manager (ELM). Since then, local authority lotteries are known to have started in Portsmouth and in Mendip, and others are in the process of being set up, including Melton and Rushmoor. 3.3 The Vale Lottery is selling about 2,200 tickets a week and is expected to make about £65,000 in the first year for good causes. 3.4 The Gambling Act 2005 includes as a permitted category of a lottery, a ‘local authority lottery’. Local authority lotteries are promoted by the local authority and must be licenced by the Gambling Commission. Authorities may use the net proceeds of such lotteries for any purpose for which they have power to incur expenditure. 4 LOTTERY OPERATION 4.1 The options for running a local authority lottery include running it in-house, or to partner with an External Lottery Manager. To run a lottery in-house would require staffing, including a lottery manager and the purchase and running of software systems. The costs of this have been explored in detail by other local authorities and found to be significant. If the Council were to partner with an ELM, other than an initial start-up costs the operation of the lottery would be fully funded through the ticket proceeds and would bring in the skills and expertise to run all elements of the lottery process. 4.2 If Cabinet are minded to agree to developing a local authority lottery it is considered that appointing an ELM would be the most cost-effective solution and is consistent with that being used by other local authority lotteries. 4.3 If a model similar to that at Aylesbury Vale is developed through using the same External Lottery Manager, this would mean that the scheme is likely to operate as below: 1.Tickets are purchased (on-line only) for £1 and each ticket has a 1 in 50 chance to win; 2. Prizes are likely to be in the range of free tickets for matching 2 out of 6 numbers to a maximum prize of £25,000 for matching all numbers; 5. Draws are every Saturday with results posted live online and winners notified by email; 6. Players sign up on-line and payment is via Direct Debit or payment card (taken either on a monthly recurring plan or a 3/6/12 month one-off payment); 7. Players can purchase multiple tickets for multiple good causes; 8. Winning players are notified via email and receive prize money directly into their nominated account or can donate their prize to a nominated good cause;
9. Good causes are paid their income automatically on a monthly basis.
4.4 The income from each £1 would be broken down as follows: Specific Good
* minus licence and marketing costs. 4.5 Approximately 60% of all ticket sales would therefore go to good causes. This compares to 28% in the National Lottery and 20% in the Health Lottery. The Role of the Council 4.6 In order to operate a Local Authority Lottery, the Council would need to apply for a Local Authority Lottery Licence from the Gambling Commission. There would need to be a contractual arrangement with an ELM (who must also be licensed) to run the lottery although the Council would retain obligations to the Gambling Commission, including policies on fair and open gambling. A local authority licensed by the Gambling Commission is required to have at least one Personal Management Licence holder. 4.7 The Council would need to promote and launch the lottery to good causes who may wish to sign up, would authorise monthly payments to the good causes and monthly returns to the Gambling Commission. 4.8 The Council would also need to define eligibility criteria against which applications from good causes wishing to join the lottery would be assessed. It is proposed that these criteria be prepared by the Portfolio Holder for Economic Development and Finance in consultation with relevant officers and Hart Voluntary Action. Similarly, the Council will need to decide where the money accumulated in the ‘central fund’ is distributed. 5 IMPACT ON ‘GOOD CAUSES’ 5.1 The ‘good causes’ element of the lottery income (circa 60%) would be split between specific good causes which can be chosen by the ticket purchaser, and a ‘central’ fund which would be distributed to good causes chosen by the Council. Good causes wanting to participate in the lottery would apply on-line and need to be approved by the Council. The ELM would set up a dedicated webpage for each good cause and provide regular marketing material to be used to promote the lottery. 5.2 Initial discussions with Hart Voluntary Action have been positive. A presentation was made in November to the Hart Voluntary Action Forum at which a number of issues were raised: 1. concern at the proportion of income given to the ELM – should be a sliding scale; 2. request that funds should go to local good causes, not national charities; 3. concern that if there were too many good causes, the additional funding they were likely to get would be limited; 4. questions as to whether paper tickets could be included. 5.3 The success of a Local Authority Lottery will depend on the success of promotion of the lottery by the good causes. It is therefore difficult to predict the likely income. In Aylesbury Vale 2% of the population over 18 are buying a ticket. If this is taken as a model then just over £40,000pa could be raised for good causes in Hart based on 1 ticket per person. However, in Aylesbury Vale the average is 1.7 ticket per player so there is the potential for this figure to be higher. 6 FINANCIAL AND RESOURCE IMPLICATIONS 6.1 There will be an initial set up cost for the Council comprising a one-off cost to the External Lottery Manager (£3,000) plus annual costs of about £650 for the lottery licence and £350 for Lottery Council Membership (plus Year 1 application costs of £275 for these in total). The annual costs can be reclaimed through the lottery ticket sales income. 6.2 There would be some initial officer time required to apply for the relevant licence and develop the required policies and criteria. In addition, there will need to be some marketing and promotion of the lottery with good causes. 6.3 Other than the initial outlay, it is considered that there is little financial risk to the Council as once the lottery is up and running all costs are met through income from tickets. The ELM has insurance for the jackpot prize thereby protecting the lottery from financial difficulty in the event of one or more jackpot winners. 7 CONCLUSION AND NEXT STEPS 7.1 A Local Authority Lottery has the potential to raise additional funds for the voluntary and community sector in Hart at no cost to those groups. Whilst the Council can do some promotion, the success of the lottery will be down to promotion by those good causes to the local community. 7.2 It is anticipated that if the Lottery is progressed this would take 12 – 14 weeks to set up. It is proposed that a target date for implementation of the Lottery would be early March to coincide with the publication of the next edition of Hart News which could be used to promote the lottery to the community. It is proposed that Hart Voluntary Action are engaged in both the set up and on-going running of the lottery.
Contact Details: Andrew Vallance, Head of Corporate Services, Andrew.email@example.com Katie Bailey, Corporate Strategy and Policy Development Manager, Katie.firstname.lastname@example.org