Report by Director of Resources and Deputy Chief Executive (attached)
The Committee considered a report by the Director of Resources and Deputy Chief Executive (circulated previously) regarding the formation of a community lottery for North Devon.
The Director of Resources and Deputy Chief Executive advised that Carol O’Neil, Lottery Manager of Gatherwell was present to answer any questions. He highlighted the following:
· A local lottery for North Devon would offer a valuable new income stream for local voluntary and community organisations.
· Local Authority lotteries have to deliver a minimum of 20% of proceeds to purposes for which the authority has the power to incur expenditure. It was proposed to deliver up to 60% of the Lottery proceeds to good causes.
· The three options for consideration by the Committee as outlined in paragraph 4.4 of the report. Option 3 was recommended to the Committee for approval.
· It was proposed that rather than allocating officer time and significant cost to setting up and managing an in-house lottery, an External Lottery Manager (ELM) was used to oversee the operations of the local lottery. There would be some in-house resources required to liaise with the external provider to get the lottery up and running.
· There were very few ELM’s in the marketplace and, as indicated, Gatherwell were specialists in delivering local authority lotteries. It was therefore proposed to utilise Gatherwell as an ELM for the lottery, initially for a one-year, with an option to extend to a second year.
· Gatherwell now provided this service for around 140 local authorities, including district, metropolitan, county and unitary councils, and their remit was to increase funding to good causes. No other quotes have been obtained from lottery providers as there does not appear to be any other company that can facilitate this type of local authority lottery.
· One of our neighbouring local authorities, Teignbridge District Council, recently set up their community lottery and as part of their research considered other ELM’s as detailed in paragraph 4.8 of the report.
· The Council would need to define eligibility criteria against which applications for good causes wishing to join the lottery would be assessed. The proposed criteria was detailed in paragraphs 4.10, 4.11 and 4.12 of the report.
· Once the criteria have been agreed, Gatherwell would set up a new website and manage the publicity and recruitment of good causes to the platform. Experience of running 140 such lotteries suggested that there was no upper limit on the number of good causes and the most successful lotteries support the largest numbers of causes.
· Local authorities would have significant input into the branding, marketing and launch of the lottery, even to the extent of naming the lottery, however ongoing marketing need only incur modest expenditure, with good causes largely doing this work themselves.
· Ticket sales would all be administered by the ELM and participants would be expected to set up a monthly direct debit. No tickets were sold in shops, offices or on the street. The ELM would also be responsible for payment of prizes and distribution of proceeds to good causes and back to the Council. Each ticket costs £1 and the proceeds would be distributed as detailed in paragraph 4.15 of the report.
· The percentage of the ticket sales going to good causes (up to 60%) was significantly higher than those lotteries offering large jackpots – Euromillions and the National Lottery (28%), the Health Lottery (20%) and the Postcode Lottery (27.5%).
· The Lottery was based on a different principle to the UK Lotto and the numbers used were the results of the Australian Super 66. This was a combination lottery that uses only the numbers 0 to 9 which were then randomly drawn by a computer. As the Super 66 was drawn weekly on a Saturday morning (UK time) the deadline for participating in the local lottery is 23:59 Friday. Players (aged 16 or over) were able to choose 6 numbers, and to win the weekly jackpot they must match both the numbers and sequence as drawn. Players can also win a prize if the ticket matches the sequence of the first or last 2, 3, 4, or 5 numbers drawn.
· The jackpot was an insured prize and was a guaranteed pay out of £25,000 per winner (even if multiple people win the jackpot it was not shared or rolled over). The ELM takes out insurance to cover all prizes and the risk of ticket sales not being sufficient to cover the prize pay-out lies with ELM. The table in paragraph 4.19 of the report detailed the winning odds and their prizes.
· The process of setting up a local authority lottery normally takes about six months from the date of agreement to approval by the Gambling Commission.
· The proposed approach would enable charities and good causes to ‘sign up’ to take part in the lottery, with 50% of the revenue from ticket sales going directly to the good cause selected by the purchaser.
· The Council would be the overall licence holder and control the good causes joining the scheme. Players buying tickets through specific web pages would know that the proceeds were for that specific good cause. This in turn motivates the group to gain more players to support their specific cause.
· Lotteries were the most common type of gambling activity across the world, and considered to be a ‘low risk’ form with respect to the emergence of problem gambling. This was due to its relatively controlled form. The Lottery would help mitigate against many of the issues related to addictive gambling as outlined in paragraph 4.26 of the report.
· Gatherwell recommend that each council becomes a member of the Lotteries Council, which provides a range of services for its members, including acting as independent arbitrator for lottery providers should a dispute arise, free access to advice from specialists, and representation with regulators and legislators. The Lotteries Council will also make a contribution to the Responsible Gambling Trust on behalf of each of its members.
· The minimum age for participation in a local authority lottery was 16 years. A person commits an offence if they invite or allow a child (someone under 16) to enter such a lottery. The Council will ensure that appropriate written policies were in place to help prevent and deal with cases of under-age play. Gatherwell, when acting as ELM, require players to declare their age as 16 or over and undertake back office and random checks to verify dates of birth and ensure no under-age players. As part of the licensing objectives the Council were required to ensure that children and other vulnerable people were not harmed or exploited by the lottery.
· In addition to operating licences from the Gambling Commission, a local authority was required to have at least one Personal Management Licence (PML) holder for the authority, even if the lottery was run by an ELM and it was recommended good practice to have 2 licence holders in event of staff absence. The ELM will have their own PML holders. It was proposed this is the Chief Executive and Chief Finance Officer.
· The ELM (ie Gatherwell Ltd) oversees all aspects of the lottery as outlined in paragraph 4.37 of the report.
· The risks associated with establishing a new North Devon Community Lottery were outlined in paragraph 4.38 of the report.
· The top prizes were insured by the ELM (External Lottery Manager) and was funded from the prize fund, which itself was funded by the ELM’s share of the ticket sales. The Council was not exposed to prize fund risk due to the contract it will hold with the ELM.
· The estimated cost of setting up the lottery was around £7,200 as follows and it was proposed that these costs be met from the Strategic Contingency Reserve. Gatherwell set up fee of £5,000 (One-off), which will include website design, hosting, maintenance and development; payment gateways (dedicated direct debit and payment card accounts); dedicated support telephone number, email and social media accounts; marketing strategy support and generic design creation; gambling licence application support and training for licence holders. Licence fees and affiliations of £1,173 (Gambling Commission licence and Lotteries Council membership) which was an ongoing cost. Launch event – costs of circa £1,000 (One-off) but will be kept as low as possible.
· One launched, the ongoing costs would be met from the “central fund” retained by the Council as detailed in paragraph 5.2 of the report.
· From comparing against the other lotteries running, the pot of money for good causes was likely to be in the region of £23,000 – £46,000 + per annum after an initial period of awareness raising. A table detailing the projections were detailed in paragraph 5.3 of the report.
In response to questions, Carol O’Neil, Lottery Manager of Gatherwell advised the following:
· Break down of costs had been provided for the first year. These figures had been set and would not change.
· Following market research, lotteries were considered to be a low risk form with respect to the emergence of problem gambling.
· She was currently working with 14,000 good causes.
· Supporters would engage from a support point of view rather than prize giving. The marketing would include the purpose of the lottery to support good causes. The lottery helped to keep small charities going who were struggling financially.
Councillor Roome declared a non-registerable interest in this item as he had experience in setting up lotteries (declared for transparency purposes only and no action taken).
In response to questions, the Chief Executive advised the following:
· The purpose of the lottery was to help raise funds for small charities and good causes. It was not about raising funds for the Council.
· 140 other Local Authorities had established lotteries. They would have also taken into consideration issues regarding gambling.
In response to questions, the Director of Resources and Deputy Chief Executive advised the following:
· The promotion of the lottery would only include the Council as a licence holder and it would not be promoted as a North Devon Council lottery.
Councillor C. Leaver requested that the criteria in paragraphs 4.10.1, 4.10.2 and 4.10.3 of the report be amended to include “operate in North Devon”.
(a) That the establishment of the North Devon Community Lottery for the purpose of raising funds to support good causes, benefitting the residents of North Devon be agreed.
(b) That the appointment of Gatherwell as an External Lottery Manager to run the operational side of the lottery approved.
(c) That the criteria for which good causes should participate in the lottery as defined in section 4.10 to 4.12 be agreed subject to paragraphs 4.10.1, 4.10.2 and 4.10.3 of the report being amended to include “operate in North Devon”.
(d) That the Chief Finance Officer be authorised to apply for any necessary licences from the Gambling Commission to enable the Lottery to operate.
(e) That the Chief Executive and the Chief Finance Officer be nominated as the personal licence holders for the Lottery and authorise them to apply for the personal licence.
(f) That the management and oversight of the Lottery and the authority to approve appropriate policies and procedures associated with the Lottery be deleted to the Chief Executive and Chief Finance Officer, in consultation with the Leader and Lead Member for Commercialisation and Resources.
(g) That the one-off set up costs of £7,200 be approved as outlined in section 5.1 and be funded from the Strategic Contingency Reserve.