Stephen McGowan: All in it to win it, but wrangle will leave winners and losers

By STEPHEN MCGOWAN
Published on 03/09/2012 00:00

THE National Lottery operator, Camelot, has considerable concerns about the Health Lottery, which is approaching the end of its first year in operation.

So much so, that it asked the Gambling Commission to conduct a review of the Health Lottery on the basis that it was acting outwith both the spirit and the scripture of the legislation – the Gambling Act 2005. The commission refused to conduct the review, and Camelot sought a judicial review of that decision in the High Court.

Camelot’s beef is that 
under the National Lottery Act 1993 it is the only operator with the right to run a “national” lottery.

The Health Lottery is not a national lottery in the legal sense but Camelot say it is branded and operated as if it is. I believe that is the public perception. But it is not a “national” lottery by law. It is in fact an umbrella entity which manages 51 separately registered “societies”. Camelot believes that the Health Lottery is using these smaller registrations, issued by local authorities, 
as a way of getting round 
the monopoly created by 
the 1993 act.

The judicial review was thrown out on 22 August.

As I understand it, one 
of the principle reasons was that Camelot had taken too long to get round to raising the action but Lord Justice Stanley Burton went on to say “the question of whether multiple society lotteries should be permitted is a political question, to be determined by the Government or Parliament”.

Camelot has indicated it will appeal.

So what exactly is the Health Lottery doing? The set-up is somewhat difficult to penetrate due to the labyrinthine structuring of the act (with nary an Ariadne’s thread in sight).

The act allows small societies to apply for a registration from their local council. These societies must be “non-commercial” and the registration allows them to collect lottery proceeds of £250,000 annually. It is generally used by local charities and voluntary groups – everything from a care home to a parent-teacher association (PTA).

The Health Lottery has an umbrella entity which holds an operating licence from the Gambling Commission, allowing it to act as an “external lottery manager” 
for the 51 local groups, 
but Camelot believes that there is a “pooling” of the proceeds, thereby circumventing the monopoly that Camelot enjoys.

One of the most controversial aspects is that only 20 per cent of the proceeds are required to go to the cause. I do not know what percentage of money raised by the Health Lottery goes to local causes.

Sir Stephen Bubb, head of Acevo (which represents charity chief executives), 
said: “The loopholes allow 
the Health Lottery to pose a threat to charitable income in this country.

“Given the government’s commitment to the country’s charities, I believe it is now imperative that the government acts to close those loopholes.”

The charity sector argues that the intention 
of Parliament was for small society lottery registrations to be used for local voluntary groups, and not as a conduit to build a national “pool” of proceeds.

The Health Lottery argues it is operating under the existing parameters of the act, which is correct so far as 
I am aware. But with the court and Acevo now pointing fingers at Westminster over the drafting of the act, it will be interesting to learn if the Government thinks the Health Lottery’s number is up.

Interestingly, the National Lottery Commission, 
which regulates only the National Lottery, is soon to be merged (as part of the “bonfire of the quangos”) with the Gambling Commission, which regulates all other gambling, except spread betting.

A consultation on that proposed merger is under way, and closes on 23 October.

• Stephen McGowan, of Lindsays, is one of Scotland’s leading gambling lawyers and the author of Licensing and Gambling Law in Scotland