Research and analysis

Assessing the impacts of changes to the society lotteries sales limit

Published 26 June 2025

A WPI Economics report for the Department for Culture, Media and Sport.

June 2025

Report authors:

• Marc Brazzill – Senior Consultant
• Arushi Chitrao – Consultant
• Lucy Peel – Consultant Economist
• Tinuke Bamiro – Junior Consultant
• Rob Fontana-Reval – Chief Economist

Executive summary

Society lottery regulation

The primary objective of this research was to assess the impact of the £50 million annual ticket sales limit for society lotteries - and to ascertain what impact any increase to the limit might have. These findings show that, despite a general consensus among society lottery stakeholders that the limit should be raised, only the largest society lottery – the People’s Postcode Lottery (PPL) and the lotteries operating under its brand – are currently impacted by the annual sales limit.

Our research considered three scenarios for what might happen if the sales limit were to increase to £100 million. In all three, we anticipate growth in ticket sales for PPL and a reduction in ticket sales for the National Lottery, but the scale of the impact varies depending on which accompanying regulations change:

• PPL ticket sales are estimated to grow by between £51 million and £477 million; and

• the National Lottery’s ticket sales are estimated to decrease by between £25 million and £148 million

The knock-on impact on good causes funding is estimated to decrease National Lottery contributions by between £5 million and £30 million, whereas it would increase contributions from PPL by between £17 million and £157 million. Overall, this would lead to a net increase in returns to good causes of between £16 million and £132 million – up by between 0.8% and 6.5% on current returns to good causes. Throughout this report, the term “good causes” refers to both funding raised for charities through society lotteries and to National Lottery funding, which is divided between specific good causes set out in legislation (see below for further details). A further impact of fewer National Lottery sales would be between £3 million and £18 million less in Lottery Duty to the Exchequer.

If the annual ticket sales limit were removed, it is expected that the short- to medium-term impacts on sales and market shares would likely be similar to those seen in an increase in the sales limit to £100 million.

However, removing the annual ticket sales limit would bring two notable and, potentially significant, exceptions; one positive, one negative. Firstly, it would remove the need for PPL – or other society lotteries that grow to this size in the future – to operate multiple lottery licences, which could lead to a reduction in their operating expenses. This could – but is not guaranteed – to lead to additional contributions to good causes in Great Britain. Secondly, however, in the longer term removing the annual ticket sales limit would remove one of the policy levers available to government to protect the National Lottery and the funding it raises. It also removes the opportunity for government to evaluate changes and monitor impact – including any unforeseen consequences – from a more moderate change, such as raising the limit to £100 million.

Charities and lottery funding

The findings from this research demonstrate the importance of lotteries to the charitable sector. More than three-quarters of the charities we surveyed stated that lottery fundraising was an important source for their overall funding, with charity stakeholders interviewed keen to emphasise the importance of lottery fundraising to achieving their charitable goals. Charities were generally happy to receive both National Lottery and society lottery funding, but they serve different roles in their fundraising strategies. Unlike society lottery funding, National Lottery funding is generally for specific projects.

The good causes that are funded by each type of lottery also differ. Charities that run their own society lotteries are, of course, free to use the revenue raised as they wish in support of their charitable objectives. Larger society lotteries, such as PPL and the Health Lottery, also offer general purpose funding to the charities they support, which can be used for anything, including to pay operating costs.

The National Lottery funds good causes in four specific good cause areas, with distribution of funds managed at arm’s length from the government by 12 Lottery Distributing Bodies (LDBs). National Lottery funding differs in that it is given to use for the specific project that was applied for, so charities cannot use it for their general operating costs. This research does not make a judgement on the benefits of either approach to distributing to good causes, but it does consider how the change in composition of total contributions to good causes resulting from an increase in society lottery ticket sales could lead to different causes receiving funding.

Consumer lottery behaviour

The survey of consumers developed for this research provides insight into consumers’ decisions to play lotteries and the circumstances that might lead them to change their existing behaviour. The results show a divide between the National Lottery and society lotteries in terms of what motivates people to play. National Lottery players are more likely to be primarily motivated by the size of the maximum prize, which befits the life-changing prizes that it can offer. By contrast, society lottery players appear more motivated by the specific good causes that the lottery supports. For both groups of players, the cost of playing was cited as the most important factor in deciding whether to play.

Choice experiments were also conducted within the consumer survey to test these findings. The results show that 40.0% of people who play a society lottery say they would spend more if the size of the maximum prize increased and a further 22.0% of people who don’t currently play said that they would begin to. It was also found that 0.5% of National Lottery players would substitute their spending for PPL if its maximum prize increased by 20.0%, and 1.9% would substitute if the maximum prize doubled. The survey also found that a quarter of all customers said they would change their behaviour and spend more money on the lotteries that contribute a greater proportion of revenues to good causes if they were shown accurate information on the level of charitable giving.

Lotteries and other gambling behaviour

When asked about their other gambling behaviour, 53% of lottery players stated that they participated in a non-lottery form of gambling, which is far higher than the 16% of non-lottery players. There is also evidence that society lotteries attract a large number of people who take part in other forms of gambling – more so than the National Lottery – and that this sub-group of players has noticeably different behaviours to society lottery players who do not take part in other forms of gambling.

Introduction

The UK lottery market comprises various lotteries of differing sizes, market shares and focus areas for contributions to good causes. These range from large society lotteries and the National Lottery to very small-scale lotteries, for example at events or workplaces. The lotteries sector makes a significant contribution to a variety of good causes.

Society lotteries, which exist to raise funding for charities / non-commercial organisations, pre-date the National Lottery. They must be either registered with local authorities or licensed by the Gambling Commission, depending on the scale of their proceeds. For large society lotteries licensed by the Gambling Commission, there have been recent changes to society lottery regulations around ticket sales and prize limits. Legislation came into effect in July 2020 that increased the annual sales limit from £10 million to £50 million, increased the per draw sales limit from £4 million to £5 million and increased the maximum per draw prize limit from £400,000 to £500,000.^{[footnote 1]}

Gambling Commission statistics highlight the rapid sales and returns growth for society lotteries over the last two decades in the midst of these regulatory changes.^{[footnote 2]} The National Lottery’s sales, on the other hand, have been declining for the last three years as have the returns to good causes from the National Lottery: there was a decline in absolute terms from £1.73 billion in 2020/21 to £1.57 billion in 2023/24, but also as a proportion of sales – the 20.1% given to good causes in 2023/24 was the lowest since at least 2008/09.^{[footnote 3]}

From a regulatory perspective, some key turning points for the sector include the legislation that created the National Lottery in 1994 and the Gambling Act of 2005 that differentiated further between large and small society lotteries and introduced regulations on gambling operators in Great Britain.

The lotteries sector continues to see change from both a regulatory and a market perspective. The recent award of the fourth National Lottery licence to Allwyn exemplifies the changing nature of the lotteries sector in the UK. The first National Lottery licence was awarded to Camelot in 1994, which was responsible for the administration of the first three licences until the fourth licence was awarded to Allwyn, which became operational in February 2024. The National Lottery Commission was created to regulate the National Lottery in 1999, with these responsibilities eventually being assumed by the Gambling Commission in 2013. In 2023/24, the National Lottery’s sales revenue was allocated as follows: 57% towards prizes for players, 20% towards good cause contributions, 12% towards lottery duty (a statutory requirement) and 11% towards running expenses.^{[footnote 4]}

An original vision statement for the National Lottery was published alongside the National Lottery Act 1993, for it to:

generate funds for good causes…be operated nationwide… [and]… be truly “national”, with at least one game able to be played throughout the UK.^{[footnote 5]}

Over time the National Lottery has met these original aims, with numerous national games that have raised £50 billion for more than 700,000 good cause projects. The government has acknowledged the importance of fundraising from society lotteries and the support they provide to specific good causes or communities of interest. It has also stated that it wants ‘to see society lotteries continue to thrive, alongside the National Lottery’.^{[footnote 6]}

This research commissioned by DCMS and conducted by WPI Economics analysed society lotteries and their place in the overall lotteries sector, with a focus on assessing the impact of a potential increase of the society lottery annual ticket sales limit from the current £50 million set in 2020. According to the current legislation, operators are already able to sell tickets beyond this limit by taking out additional licences or adopting an umbrella structure with multiple licences, each of which enables £50 million of tickets to be sold. There have been calls from within the society lottery sector to increase the annual ticket sales limit to £100 million or to remove it altogether.

Research objectives

The main purpose of this research is to understand the potential risks and benefits of increasing the annual ticket sales limit for society lotteries, including to the National Lottery. This includes looking into the degree of substitution between society lottery and National Lottery products, reviewing the different types of society lotteries, and assessing the possible impact of increasing the sales limit for society lotteries.

The research objectives are:

• to gain a fuller understanding of the overall lotteries market
• to understand the main drivers of society lottery and National Lottery sales
• to examine the degree of substitution between society lottery and National Lottery products and between different society lotteries
• to understand the impact of a potential increase in annual ticket sales limits for society lotteries on key groups such as customers, society lotteries of all sizes, the National Lottery, charities and returns to good causes

Research methodology

This research commenced with an assessment of the existing evidence relating to how the lotteries market currently functions, how consumers make choices, and the impacts of those consumer choices. A logic model was then developed to assess how changing the annual sales limit could impact the lotteries market and the potential benefits and disbenefits. Qualitative research was conducted through a series of stakeholder interviews in order to test this context and the impact of policy decisions.

For a quantitative analysis to take place, two surveys were developed: a consumer survey that contained a set of questions to understand behaviour, motivations and how those might change in the future, incorporating behavioural science considerations and choice experiments; and a charity sector survey that contained questions to understand charities’ experiences of receiving National Lottery and society lottery funding and observed impacts of previous policy changes.

Drawing from all these evidence sources, an assessment of the nature and scale of the potential impact of increasing the sales limit for society lotteries was made.

Evidence review and logic model

Approach

The evidence review focused on investigating four key areas related to the UK lotteries market and lottery consumers:

1. the current structure of the lotteries market in the UK

2. the impact of lotteries on society

3. consumer lottery and gambling-related decision making; and

4. policy and regulatory decisions that have shaped the current UK lotteries market

A series of papers and reports were documented, and their quality was assessed according to the following criteria:

• For grey literature (such as consultancy research), it was important to establish which organisations commissioned that research and the potential for bias in the conclusions of those reports.
• To understand the validity of conclusions being reached, it was necessary to consider the analytical methods used. For example, how appropriate is the method? Is it possible to recreate the approach used? Does it use robust quantitative evidence and statistical methods?
• The date of publication. In general, results from papers published more recently were given greater weight.
• The population being studied. Given this study is concerned with policy changes in Great Britain (as large society lotteries do not operate in Northern Ireland), to what extent are international findings transferable and relevant?

The review helped to establish key lottery market outputs and impacts, which could then be incorporated within a logic model setting out the potential implications of a changing sales limit.

Key findings from the evidence review

Existing structure of the lotteries market/broader context

The UK lotteries market features The National Lottery, first licensed in 1994, alongside society lotteries which exist to raise funding for charities and non-commercial organisations. The market structure is moulded by regulation deriving from the government’s policy framework, including setting annual ticket sales limits for society lottery operators.

Time-series data from the Gambling Commission has shown the relatively rapid sales and good causes returns growth for society lotteries in the past two decades - in the context of changes to ticket sale and prize limits (most recently in 2020).^{[footnote 7]} Total sales for society lotteries stood at £1.05 billion in 2023/24, compared with £871 million three years prior. However, beneath those totals the size of society lotteries can vary massively, with larger operators like the People’s Postcode Lottery (PPL) (£633 million in ticket sales in 2023) operating on an entirely different scale to much smaller society lotteries (for example, Battersea Cats and Dogs with £6 million in sales). The latest sales figures for the National Lottery are much larger than for collective society lotteries, standing at £7.80 billion in 2023/24. However, in contrast to the society lotteries, National Lottery sales have been fairly constant in recent years, with a peak of £8.39 billion in 2020/21.

Figure 1: Indexed growth in lotteries’ sales over the past 10 years (2013/14 = 100)

Use zoom on your browser to view.

Source: Gambling Commission (2024) Industry Statistics, November 2024

Figure 1 shows an increase in indexed sales for society lotteries from 2013 to 2024. It shows that although indexed sales for the National Lottery has increased between 2013 and 2024, this growth the been slow and has shown a slight declining trend since 2020.

The review also considered the examples provided by other lottery markets in Europe, which have different structural and policy environments, but might provide helpful lessons for how state lotteries and society lotteries interact. Other European markets which allow at least one charity lottery to generate material returns are Germany, the Netherlands, Norway and Sweden. Otherwise, the majority of European countries have no charity lottery sector, including France, Italy and Finland.

A report by Regulus Partners observes that the Netherlands places relatively few restrictions on how charity lotteries operate, with the main regulation being that charity lotteries have to pay a greater proportion (40%) of revenues towards good causes than state lotteries.^{[footnote 8]}

Other regulatory examples include:

• In Sweden, the value of lottery prizes must be at least 35.0% but not more than 50.0% of the value of the sales.^{[footnote 9]}
• In Germany, charity lotteries are subject to a 16.7% lottery tax on payouts.^{[footnote 10]} Lotteries are subject to a state monopoly, where private operators can obtain a brokerage licence to distribute products of the state lotteries.^{[footnote 11]}

Evidence submitted to DCMS as part of the 2018 Consultation on Society Lottery Reform states that two state lotteries in the Netherlands chose to merge as a result of losing market share due to the growth of society lotteries.^{[footnote 12]} However, Regulus Partners argue that charity and state lotteries can coexist without creating negative competition dynamics. Their paper argues that, whilst some degree of regulation is likely to be desirable for any government, if the lottery market were not a monopoly and restrictions were removed, revenue in that less restricted market would total €10 billion per year across all EU countries. However, the method used to reach this figure is unclear and, given the report has been commissioned by the Association of Charity Lotteries in Europe, the findings in support of allowing society lotteries to grow are arguably not surprising.

Lottery market outcomes and impacts

The key metrics which are useful for tracking changes in the lotteries market include sales levels, good cause contributions, prize sizes, expenses, and licence numbers (for society lotteries). To consider potential market composition changes, the increase / decrease and quantum of these metrics should both be considered.

Table 1 captures the latest Gambling Commission published figures relating to these outcomes.

Table 1: Distribution of sales revenue for the National Lottery and society lottery sector.

The National Lottery

Metric	2023/24	Change from previous year
Sales	£7,804 million	-5%
Good cause contributions	£1,572 million (20%)	-8%
Prizes	£4,474 million (57%)	-5%
Lottery Duty	£937 million (12%)	-5%
Expenses[footnote 13]	£822 million (11%)	3%
Licences	-	-

Society lotteries

Metric	2023/24	Change from previous year
Sales	£1,057 million	12%
Good cause contributions	£462 million (44%)	9%
Prizes	£302 million (29%)	16%
Lottery Duty	-	-
Expenses	£293 million (28%)	12%
Licences	603	-2%

Source: Gambling Commission (2024) Industry Statistics, November 2024. Note: Figures in parentheses represent the share of sales distributed.

The largest society operator, PPL, has experienced significant sales growth (29.8%) since 2020 when the annual ticket sales limit was raised to £50 million, which far outstrips growth among the rest of the society lottery sector over the same period (10.3%). The distribution of sales by PPL has also changed slightly over this time, with an increase in the proportion returned to good causes from 32.0% to 33.0% and a reduction in the proportion used for operating expenses from 28.0% to 26.9%.

For comparison, the rest of the society lotteries sector has generally returned a much greater share to good causes, but it has also seen a reduction in the proportion of sales returned to good causes from 64.0% to 59.6% since 2020 and an increase in the proportion of sales used for expenses (25.1% to 28.9%) and prizes (10.9% to 11.5%).

Table 2: Sample of licensed society lottery annual proceeds expenditure rates, 2023^{[footnote 14]}

Society lottery (selected at random)	Prizes	Expenses	Good cause contributions
Society lottery 1	69.2%	10.8%	20.0%
Society lottery 2	9.4%	69.9%	20.7%
Society lottery 3	23.2%	42.7%	34.1%
Society lottery 4	36.7%	29%	34.3%
Society lottery 5	11.2%	46.9%	41.9%
Society lottery 6	57.0%	1.0%	42.0%
Society lottery 7	6.0%	43%	51.0%
Society lottery 8	39%	10.0%	51.0%
Society lottery 9	6.8%	28.2%	65.0%
Society lottery 10	3.9%	11.7%	84.4%
Society lottery 11	1.2%	2.9%	95.9%

Source: Gambling Commission, Aggregate lottery submission data: random sample of total annual proceeds spending for 2023.

A key difference between the National Lottery and society lotteries is in how they approach funding of good causes. National Lottery funding goes to 12 distributors, which support the arts, sport, heritage, and health, education, environment and charitable causes. These distributors then allocate funds to specific projects that have been put forward for funding by organisations in those areas. An example of how this support functions can be seen in Case Study 1 (below). Furthermore, the National Lottery is required to pay Lottery Duty – set at 12% of sales revenue, which is in addition to operating expenses and therefore reduces the funding available for good causes.

Meanwhile, the society lottery sector raises funding for a wider range of charitable organisations and purposes. Usually, this funding is not limited to specific projects, but it can be used for any purpose including running costs. Individual society lotteries are often run for specific fundraising activities and causes, but larger society lotteries often distribute their funding to a wide range of charitable causes and sectors.^{[footnote 15]}

Case study 1: National Lottery funding to support Arts Council England in advancing the arts sector in the UK

Arts Council England (ACE) is the national development body for arts and culture across England. The arts currently receive 20% of the money raised through the National Lottery for good causes, which includes around 14% that is used by ACE to fund arts and culture projects in England.^{[footnote 16]}

From 2023 until 2026, ACE will have invested £116.8 million of National Lottery funding per year in Arts Council National Lottery Project Grants, their open-access funding programme. Apart from this, £14.4 million of National Lottery funding per year will go towards ‘Developing Your Creative Practice’, a programme ‘to support individuals who are cultural and creative practitioners and want to take time to focus on their creative development’. This opens the door for greater diversity in art forms and to further innovation in the sector.

Providing funding for good causes is the main social benefit provided by the National Lottery and society lotteries. However, the different types of good causes funding they provide means that if society lotteries were to increase their revenues at the expense of the National Lottery, there would be a reduction in the amount of funding for the types of good causes funded by the National Lottery and a corresponding increase in funding for the types of good causes supported by society lotteries.

Looking at outcomes for consumers, the National Lottery distributed 57% of its revenue to prizes in 2023/24, which is significantly higher than the 29% distributed by the society lotteries sector. However, the National Lottery is expressly designed to raise funding for good causes by offering life-changing prizes which are significantly larger than anything offered by society lotteries. Further, any prizes that are not claimed by consumers within 180 days are diverted to good causes.

Lotteries are a gambling product, and therefore consumer disbenefits linked to gambling-related harm issues are exhibited from National Lottery and society lottery participation. 

One study that analysed a sample of more than 500 people in Australia whose only gambling activity was playing the lottery found that one-third of these 500 people were at some level of gambling-related risk due to their use of lottery products.^{[footnote 17]} In particular, younger respondents and males were among those more likely to report risk of gambling-related harm. A report commissioned by the Lotteries Council, the UK representative body for society lotteries, argued that society lotteries in particular are relatively less linked to gambling-related harm on the basis that a higher proportion of participants in society lotteries do so to support good causes (55%) than people who partake in non-lottery activities (18%).^{[footnote 18]}

Separate analysis by Public Health England uses the Problem Gambling Severity Index (PGSI) to observe that at-risk gamblers^{[footnote 19]} participate the least in the National Lottery (6.8% participation rate) and other lotteries (8.0%), compared to other gambling activities (for example, 44.2% for online gambling on slots, casino or bingo games).^{[footnote 20]} This analysis is supported by findings from the Gambling Survey for Great Britain that people who gamble on lotteries were less likely than average to have a PGSI score of 3 to 7 (with this score range representing moderate risk gambling) (with this score range representing moderate risk gambling).^{[footnote 21]}

Consumer decision-making and influences

There was very little information available in the literature on how consumers choose between specific lotteries - for example, between individual society lotteries or between the National Lottery and society lotteries as a whole. However, there was relevant evidence on why people choose to participate in lotteries generally. To understand who plays lotteries and their incentives, a range of factors are considered, drawing on evidence from predominantly academic studies in peer-reviewed journals.

This research found that lottery consumers are influenced by factors including regularity of draws and larger prizes. Evidence from the DCMS Taking Part Survey in 2019/20 shows that around two-thirds (67%) of people cited large prizes as a reason for playing National Lottery games, with around a quarter (24%) stating that it was because playing supports good causes. Evidence from the US also suggests the importance of prize sizes and it found that larger jackpots boost ticket sales three times more than a decrease in the ticket price.^{[footnote 22]} This evidence from the US also suggests that lottery spending declines as income levels increase, and products have been found to be more appealing to people with lower financial literacy and incorrect beliefs on odds of winning.

Whilst not a directly comparable metric to income, for gambling activity more broadly, PHE’s study showed little variation in participation in England based on the Index of Multiple Deprivation (IMD) for where a person lives. However, for lottery activity, people who live in areas in the most deprived quintile were the least likely to play the National Lottery draw-based games (32.5%) and society lotteries (10.8%), but the most likely to play scratchcards (21.3%). Meanwhile, people living in areas in the middle quintile of deprivation had the highest participation rates for the National Lottery (38.2%) and society lotteries (16.3%).^{[footnote 23]}

Meanwhile, there are equal rates of participation by gender among lottery players, but men play lotteries more frequently and spend larger amounts.^{[footnote 24]} Findings are mixed on whether play on lotteries increases with age. Spending on gambling in general increases according to education levels,^{[footnote 25]} but evidence suggests that spending decreases with increased levels of education on lotteries specifically.^{[footnote 26]}

There is some evidence that gambling products such as betting could be substitutes for lottery play (although that substitution effect appears to be somewhat weak).^{[footnote 27]} There is also concern voiced that, beyond the gambling market, supermarket prize promotions and other instant win products could substitute for playing the lottery.^{[footnote 28]} There is particular concern within the lotteries sector that free prize draws, which operate in a similar way to lotteries with the exception of offering a free route to entry, do not require a Gambling Commission licence and are not legally required to contribute to good causes.^{[footnote 29]}

Policy decisions (sales limit changes) and implications

There have been differing perspectives as to whether the growth of society lotteries, and reforms to prize limits, will mean society lotteries complement or encroach upon National Lottery sales. 

As part of the government consultation before the society lottery sales and prize limits rose in 2020, the-then National Lottery operator Camelot and the National Lottery distributing bodies expressed concerns about the umbrella lottery structure, where multiple society lotteries can be promoted under a single scheme. It was suggested that, by operating nationally under a single brand and with significant expenditure on advertising and marketing, the largest umbrella lotteries were at risk of moving into the distinct space of the National Lottery.^{[footnote 30]}

However, the evidence suggests that the predicted impact has not occurred. While sales for PPL and the Health Lottery in 2023 did increase to a little below £700 million, Gambling Commission data shows that, despite this, National Lottery sales also increased by £1.2 billion between 2017 and 2022.^{[footnote 31]}

Moreover, DCMS analysis based on Gambling Commission advice found that, following the 2020 prize limit increase, the majority of society lotteries did not offer maximum prizes above £25,000 even when sales levels allowed them to. This was likely due to uncertainty in ticket sales for individual draws, which have the maximum prize announced in advance. It was also found that 12 society lotteries recorded total proceeds higher than the previous annual sales limit of £10 million by the end of 2020, which represented just 2% of lottery licences.

More recent data provided by the Gambling Commission shows that the majority of society lotteries are not even close to reaching the current £50 million sales limit. With the exception of lotteries under the PPL brand, no society lotteries had annual sales above £15 million in 2023/24 and just 8% had annual ticket sales between £3 million and £15 million.

However, PPL has reported that three Postcode Trusts (individual lottery licences under their umbrella brand) were forecast to reach their £50 million sales limit in 2022 and that they reduced ticket prices to avoid breaching the limit.^{[footnote 32]} Had ticket prices remained the same, any additional revenue could potentially have been used for prizes, covering operating expenses or funding for good causes. PPL has also argued that regulations amount to an administrative burden that is hampering growth and affecting further contributions to good causes.

Summary

Society lotteries have grown rapidly in recent years. The total size of the sector exceeded £1 billion for the first time in 2023/24, representing 27% growth since 2019/20 – the year before the annual ticket sales limit rose to £50 million. Gambling Commission evidence on ticket sales shows that only lotteries under the PPL umbrella are currently approaching this limit. However, despite the rapid increase in the size of the society lottery sector, ticket sales and the amount of funding for good causes is still substantially smaller than that of the National Lottery.

The existing evidence base largely consists of reports that reflect the interests of the stakeholders that have commissioned them. Reports commissioned by the representative body for society lotteries (The Lotteries Council) and the largest society lottery brand (PPL) believe that increasing the annual sales limit would allow society lotteries to reduce expenses associated with multiple licences and redistribute savings towards good causes. Reports from the opposing perspective that suggest that society lottery growth is diverting sales away from the National Lottery may reflect the fact they are commissioned by National Lottery licence holders or stakeholders. 

Ultimately, the nature of the polarised views expressed in the literature limits the extent to which this evidence alone can underpin policy decisions. Therefore, it necessitates further investigation of the impact of policy changes and the consumer decision-making which drives lottery participation.

Towards a logic model

A logic model has been developed based on this targeted evidence review. It maps out possible outcomes and impacts of an increased annual sales limit. 

The model seeks to consider the multitude of different channels that could lead to different outcomes if society lottery sales limits were increased further. The model captures various channels to account for the uncertainty of consumer and operator decision-making, all of which will have a bearing on lottery market metrics such as good cause donations and total sales. Given the distinct functions of the National Lottery and society lotteries, the longer-term impacts for each have been detailed separately. The logic model is presented below (Figure 2).

Figure 2: Raising Society Lottery sales limit - logic model

You can download a larger pdf version of Figure 2.

Figure 2: Raising Society Lottery sales limit- logic model (text version)

Context

Regulated lotteries market

• The National Lottery (TNL)

• Large society lotteries (SLs)

• Small society lotteries

Wider market

• Gambling: terrestrial and remote betting and gaming, gaming machines, bingo and pools
• Prize draws

Consumer demand

• Lottery features: rollover size, frequency of draws, likelihood of winning, scratchcard v. draw-based, advertising, online or face-to-face, day of week
• Donating to charity
• Macroeconomic conditions
• Demographics- age, income, education

Policy lever: changing sales limit.

Possible channels

Consumer decision-making

Substitute between lotteries (TNL and a SL, and/or between two SLs) v. Treat lotteries as complementary

Competition

Increased competition between lotteries (cannibalisation) v. No effect on competition

Market size

Both lotteries grow v. Both lotteries grow but one at a slower rate v. One lottery shrinks, the other grows

Measuring changes

Gambling Commission metrics

• Good cause donations
• Sales
• Prizes
• Licence numbers

• Expenditure (incl. advertising)

• Transparency

Qualitative insights

• Experience of past policy changes
• Proximity to current sales limits

Possible outcomes*

*Outcomes are dependent on which channel is followed

TNL benefits

• Investment allocated through 12 distributors, supporting arts, sport, heritage, and health, education, environment and charitable causes
• Lottery Duty revenue
• Funding for projects

SL benefits

• Spans a vast range of charitable organisations/purposes
• Funds for particular charities or branded lotteries
• Wider charitable impacts: unrestricted funding, long-term support

TNL disbenefits

• Lost market share and reduced project investment

SL disbenefits

• Crowding out of the smaller regulated SLs and their funding

Consumer disbenefits

• Potential to exacerbate gambling harm issues

Research findings

Methodology of primary research

The primary research methods used for this project were stakeholder interviews and surveys of the charity sector and lottery consumers. A total of 12 stakeholders across the breadth of the lottery sector in the UK were interviewed to ensure a wide range of perspectives were collected. The survey of the charity sector asked a sample of 100 senior financial decision-makers at UK charities about their views on lottery fundraising and, if applicable, their experience of running their own society lottery. For the consumer survey, a sample of 4,000 people (including 1,000 who play the National Lottery only, 1,000 who only play society lotteries, 1,000 who play both types of lottery and 1,000 who play neither) were asked about their decision-making around lottery participation and its relationship to their broader gambling behaviour.

Findings

The findings from stakeholder interviews and the two surveys can be categorised into five main areas: overall market structure; charity sector and lotteries; consumer behaviour; regulation; and lotteries and gambling.

Figure 3: Categories of findings from primary research (text version)

Market structure

• Use of umbrella structures
• Barriers to growth
• Barriers to entry

Charity and lotteries

• External lottery funding
• Running a society lottery

Consumer behaviour

• Choice of lottery
• Competition with prize draws

Regulation

• Impact of prize increases on player spending
• Substitutability between TNL and SL
• Gambling levy

Lotteries and gambling

• Lotteries and gambling participation
• Gambling harm

1. Market structure

Use of umbrella structures

According to the Gambling Commission, an umbrella structure is where an External Lottery Manager (ELM)^{[footnote 33]}, society lottery operator or a collective of society lottery operators promote multiple society lotteries under a single brand.^{[footnote 34]} Interviews with stakeholders showed that the lottery sector, barring a few big players with high turnover, generally comprises small-scale operators. The rise in ELMs has changed the structure of the sector, taking away the risk for smaller society lotteries by putting the operating risk on an ELM. Although many charities run their lottery via an ELM, we do not expect this to affect the findings in this report, and assessing the impact of ELMs on the market was beyond the scope of this research.

The use of umbrella structures has grown since the launch of The Health Lottery in 2011, which was - at one time - an umbrella brand for 51 smaller health-based charity lotteries. This was following the High Court’s ruling that established the umbrella lottery as a lawful way to run a society lottery. While large society lotteries are governed by the Gambling Act 2005, umbrella structures as a single entity are not. Instead, their component lotteries are governed by the Act. Umbrella lotteries can continue to grow and advertise their products as a single brand. They need to be transparent about the destination of the funds raised. Their advertising should make clear that it is not one big lottery, but several small ones combined under an umbrella brand - and the prize amounts advertised should reflect that. Some stakeholders interviewed thought that the increased publicity from umbrella lotteries has benefited smaller lotteries by raising the profile of lotteries as a means of fundraising.

Barriers to entry

Current society lottery regulations stipulate that 20% of lottery proceeds must go towards good causes. Some stakeholders commented in interviews that new entrants into the market can find it challenging to make profits above 20% right from their first year of operations and that they believe this rule should be relaxed in the first year. Although this research was not looking at the regulations around contributions towards good causes, the findings are recorded here for completeness.

2. Charities and lottery funding

The findings in this section are drawn from a survey of 100 charities in Great Britain. Respondents were randomly selected but were required to be senior financial decision-makers, defined as C-level executives or senior management, in their charitable organisation. However, the survey is not representative of the makeup of the charity sector in terms of charity size or the types of causes supported. The survey also included an oversampling of charities that currently operate society lotteries in order to ensure that robust findings could be drawn from the data.

The lotteries sector is an important source of funding for charities. Among the 100 charities surveyed for this research, 69% currently received funding from an external lottery, which was the most common form of fundraising ahead of fundraising events (67%) and regular donations through subscription programmes (62%). The National Lottery was the most common source of lottery funding to charities - received by 52% of charities surveyed - followed closely by third-party society lotteries (44% of charities surveyed). The survey also found that a minority of charities (20%) currently operate their own lotteries. As the survey deliberately oversampled charities that operate their own society lottery to obtain more information from this group, this number should not be seen as reflective of the wider charity population. Among the charities that operate their own society lottery, three-quarters of them also receive funding from an external lottery: 55% from the National Lottery and 65% from a third-party society lottery, including 45% that received funding from both.

External lottery funding

For charities that receive external lottery fundraising - either from the National Lottery or from a third-party society lottery - the most commonly-cited reasons for choosing to do so are that it attracts large donations (55% of lottery funding-receiving charities surveyed) and that it raises awareness of the charity’s causes (47%). However, the reasons vary according to the type of lottery that funding is received from:

• 66% of charities said that a key motivation for pursuing funding from third-party society lotteries was that it attracts a large number of donors to their charity - compared to just 35% stating the same for National Lottery funding. In support of this, interviewed stakeholders said that receiving funding from a large society lottery brand helps smaller charities to be more recognised and reach more people. 

• 64% of charities said that attracting large grants was one of the main attractions of National Lottery funding - compared to just 43% for third-party society lotteries. Interviews with National Lottery funding recipients also highlighted that receiving National Lottery funding can be a mark of project quality and therefore often acts as a springboard for receiving additional large donations from private foundations and individuals.

Charities that receive lottery funding are also often highly reliant on it for achieving their charitable goals. More than three-quarters of charities that receive external lottery funding report that it is an important source of their overall funding - 77% for third-party society lottery funding and 88% for National Lottery funding. Around half of charities that receive external lottery funding also stated that their charitable impact depends on the funding - 52% for National Lottery funding and 44% for third-party society lottery funding.

Overall, charities do not display a preference for one type of external lottery funding over the other - 35% state they would benefit more from National Lottery funding and 34% that they would benefit from third-party society lottery funding. However, charities are more likely to believe they benefit more from the type of funding that they already receive.

There are clear trends in the reasons why charities prefer one form of external lottery funding over the other. The larger amounts of money available from National Lottery grants compared to society lotteries’ is an important factor in why charities prefer National Lottery funding. Charities that prefer National Lottery funding are highly likely to state that it is because they can access larger amounts of money (69%). By contrast, larger amounts of money is cited by just 32% of charities that prefer to receive third-party society lottery funding.

Figure 4: Reasons charities prefer one type of lottery funding over the other

Reasons for funding preference	Preference for National Lottery funding (%)	Preference for society lottery funding (%)
Access to larger amounts of money	70%	30%
Faster fundraising	35%	30%
Existing relationship	35%	25%
Simpler process	25%	30%
Need funding for a specific project	25%	40%
Less work for our organisation	22%	35%
More control over how the money is spent	15%	55%

Having more control over how they spend the money is the most common reason (56%) for preferring third-party society lottery funding. By contrast, it is the least common reason (15%) for those preferring National Lottery funding, whose project-based nature specifies how the funding can be used by charities. In support of these survey findings, stakeholder interviews reported that the:

unrestricted nature of large society lottery funding helps support locally-embedded charities as they often need a lot of support in governance, lobbying and access to funding in their own right.

According to the survey results, there was a lack of awareness of third-party society lottery funding by charities that received just National Lottery funding - 47% stated they weren’t aware of third-party society lottery funding prior to completing the survey. However, 65% of them stated that if their National Lottery funding were reduced, they would pursue funding from third-party society lotteries. For those charities that do receive third-party lottery funding, their experience was largely positive - with 64% rating their experience of applying for funding as either ‘Good’ or ‘Excellent’, and 82% stating that they had a positive relationship with the third-party lottery.

Figure 5: Charities’ experiences of third-party society lottery funding

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Aspect of experience	Excellent experience (%)	Good experience (%)	Average experience (%)	Poor experience (%)	Very bad experience (%)
Relationship with third-party lottery	28%	54%	14%	2%	2%
Reporting of how funds were utilised	32%	50%	16%	2%	0%
Process of receiving funding	28%	38%	26%	8%	0%
Applying for funding	24%	40%	28%	4%	4%
Finding information on the available funding	27%	33%	33%	8%	0%

Charities also reported another incidental benefit of getting lottery funding – the chance to be a part of a wider group of charitable organisations, which helps their networking and collaborative opportunities for good causes. Charities affiliated with PPL reported that they had the opportunity to connect with other affiliated charities, collaborate on initiatives and share best practices. One stakeholder indicated that it could lead to links with charities that they would not otherwise interact with, thereby broadening perspectives and opening up new possibilities for collaboration and innovation.

These kinds of networking benefits were not observed for National Lottery stakeholders. They did, however, report that the National Lottery provides crucial funding for their projects, demonstrated by Case Study 2 (below).

Running your own society lottery

The survey found that a significant minority of charities run their own society lottery (either themselves or using an ELM) - 34% of the charities surveyed have done so since July 2020. However, 34% is likely to be an overestimate of the true percentage of charities that operate their own society lottery because the survey deliberately oversampled these charities to obtain more information from this group.

Case Study 2: National Lottery Heritage Fund funding for the Wallace Collection’s activities

The Wallace Collection is a national museum in London. It holds great historic importance for the country, and is run as a charity that is exempt from registration under the Charities Act 2011.^{[footnote 35]} It receives 40% grant-in-aid from DCMS and meets the rest of its expenses through a mix of commercial revenue, event hire, and fundraising. It recently received funding from The National Lottery Heritage Fund (NLHF) for procurement and implementation of a new Collection Management System (CMS) and Digital Asset Management System (DAMS).

The project started in 2024 and is intended to be completed in two phases, both of which will be funded by the NLHF. It is considered an important project to advance the dissemination of the UK’s heritage and increase its soft power in the world. A functioning CMS and DAMS are critical to ensuring that the museum’s artworks are accounted for, that records are organised and widely-accessible, and that the history of the institution is preserved for posterity.

The project will benefit the museum’s online community by ensuring that open access to data remains available to the public. This is particularly important as the Wallace Collection’s online visitor numbers are comparable to those made in person. It will also reduce the environmental impact of data storage by centralising storage and removing duplication. The project had been under consideration to be implemented for more than a decade but was delayed due to a lack of funds. 

The Wallace Collection mentioned in its stakeholder interview that NHLF funding is crucial for certain types of projects because its approval is seen as a positive endorsement that then helps generate additional income from other trusts, foundations, and individuals.

A majority of those charities that run their own society lottery do so because it increases their supporter numbers (62%); raises awareness of their work (59%); and is an effective way for their organisation to raise money (53%). According to interviews with stakeholders, one of the reasons charities may run their own lottery is because they do not receive public funding - either from central or local government - and are therefore dependent on the generosity of the public for funding. 

While charities use lotteries to fundraise, they also leverage the relational aspect of a lottery. In interviews, charity stakeholders stated that playing a lottery creates a sense of attachment to the charity among lottery players, which leads to a steady stream of funds. However, survey results indicate that operating their own society lottery does not remove a charity’s reliance on external funding, with 62% of charities stating that operating their own society lottery does not lessen their reliance on external funding. Below in Case Study 3 is an example of how funding from both a third-party society and proceeds from their own lottery contributes to the overall funding structure of a charity.

Case Study 3: PPL funding for Battersea Dogs and Cats Home

London-based Battersea Dogs & Cats Home has been working in the animal welfare sector since 1860. The organisation does not receive government funding and relies entirely on its own fundraising to raise £50 to 60 million annually for its charitable objectives, which include the care of thousands of dogs and cats in London and across the UK, and now overseas. It uses various fundraising channels such as legacies (gifts in wills), regular and one-off donations from individuals, fundraising events, corporate partnerships and grants from charitable trusts. It also runs a weekly lottery programme – using an ELM – that contributes around £4 million of gross income. The charity has observed that the lottery has allowed it to offer a way for people to regularly give support that is different to a standard regular gift, and this has allowed Battersea to engage more supporters.

Battersea receives funding from PPL. In 2024, it received £2 million, which was the highest annual sum so far. The charity hopes for similar funding in 2025, and anticipates breaking through the £10 million mark in total funding from PPL by the end of 2025. It was pointed out in its stakeholder interview that PPL’s support has become more generous over time and has been very welcome, being both unrestricted funding and enabling Battersea to expand its impact for beneficiaries and deliver against its charitable objectives.

Even though the funding received from PPL forms a minor part of the overall funding, Battersea reports that being a part of the PPL charities network enables it to network with similar organisations and share best practices and perspectives on approaches to fundraising.

Charities also face certain challenges in running their own lottery. There are fixed costs associated with running a lottery and it can be a difficult market to enter. According to the survey results, the most common reason given by charities for not operating their own lottery was the cost of doing so (52%), followed by a lack of internal resources (44%). Around a third of charities (33%) stated that the regulations surrounding society lotteries was a main reason that they have not run their own society lottery.

In stakeholder interviews, charities that did not run their own society lottery also suggested that the time and expense of running a lottery was a factor in their decision to not do so, and they also highlighted a lack of confidence in generating substantial funding through these means. Interviewed charities also stated that the time and expense of running a lottery would distract them from their charitable aims.

Figure 6: Reasons charities chose to run their own society lottery

Reasons	% of charities
They reduce our reliance on external sources of funding	38%
They are easy to set up and manage	45%
They have broad appeal	45%
They are an effective way for my charity to raise money	50%
They raise awareness of our work	58%
They increase the number of supporters	62%

3. Consumer lottery behaviour

The findings in this section are drawn from a large survey of 4,000 consumers, made up of sub-samples of 1,000 people who play the National Lottery only; 1,000 people who only play society lotteries; 1,000 people who play both types of lottery; and 1,000 people who play neither.

In order to ensure that the survey is representative of the lottery consumer and gambling sectors, the survey results have been weighted to match the proportion of people who play:

• (i) the National Lottery
• (ii) society lotteries, and
• (iii) other gambling activities^{[footnote 36]}

Consumers were asked about their decision-making around lottery participation and its relationship to their broader gambling behaviour.

Demographic make-up of lottery players

In the survey sample, lottery players were more likely to be male (54%) than female (46%). However, there was some variation according to the type of lottery that a person played. 56% of the people surveyed who played only the National Lottery were male, which rose to 66% of people who played only society lotteries, but people who played both lotteries were more likely to be female (57%). 

There was also a generational difference in the players of different lotteries, with National Lottery players tending to be older than society lottery players:

• 46% of the people surveyed who played only the National Lottery were aged over 60 years old compared to just 26% of respondents who only played society lotteries and 25% of those who said they played both types of lottery; 
• People aged between 44 and 59 years old made up roughly a third of the people who played only the National Lottery (30%), society lotteries (33%) and both types of lottery (29%);
• Respondents aged between 28 and 43 accounted for 36% of the people who only played society lotteries, just 18% of those who only played the National Lottery and 29% of players of both types of lottery;
• Younger people aged between 18 and 27 were the least likely to play a single type of lottery. Only 2% of National Lottery players and 3% of society lottery players were in this age bracket, although younger people made up 15% of the people who said they played both types of lottery.

How do consumers choose which lottery to play

When asked about why they play lotteries, 50% of the lottery players surveyed said that the size of the maximum prize was an important deciding factor. This compared to 67% of respondents who stated that it was important that the lotteries they played give money to good causes - around 37% of lottery players rated both the size of the maximum prize and good causes as important factors.

However, there were some noticeable differences according to which type of lottery consumers played:

• For people who played only the National Lottery, the size of the maximum prize was slightly more likely to be rated very important in their decision to play the National Lottery (27%) than the good causes it supported (22%). 
• However, this tendency was then reversed in people who played society lotteries exclusively, with 35% rating the good causes to which the lottery donates as very important to their decision to play, compared to just 14% who rated the size of the maximum prize as very important.
• Among respondents who played both the National Lottery and society lotteries, the relative importance was similar to those who played society lotteries only. 33% said that the good causes supported by the lottery were very important to their decision to play, compared to 20% who said that the size of the maximum prize was very important.
• When people who said they did not play lotteries at all were asked hypothetically which factors would be important if they decided to play, 30% said the good causes supported by that lottery would be very important and 19% said that the size of the maximum prize would be very important.

Figure 7: Reasons consumers rated very important in their decision to play a lottery

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Factors affecting decision to play a lottery	Type of lottery	Percentage of people who find it very important (%)
The cost of playing	Both the National Lottery and society lotteries	34%
The cost of playing	The National Lottery only	45%
The cost of playing	Society lotteries only	25%
The cost of playing	No lotteries	44%
Size of the maximum prize	Both the National Lottery and society lotteries	20%
Size of the maximum prize	The National Lottery only	27%
Size of the maximum prize	Society lotteries only	14%
Size of the maximum prize	No lotteries	19%
Odds of winning any prize	Both the National Lottery and society lotteries	17%
Odds of winning any prize	The National Lottery only	20%
Odds of winning any prize	Society lotteries only	15%
Odds of winning any prize	No lotteries	35%
The good causes the lottery donates to	Both the National Lottery and society lotteries	33%
The good causes the lottery donates to	The National Lottery only	22%
The good causes the lottery donates to	Society lotteries only	25%
The good causes the lottery donates to	No lotteries	30%

The cost of playing a lottery was also a key factor in people’s decisions to play a lottery. 45% of survey respondents who played only the National Lottery rated the cost of playing as a very important factor, which was notably higher than the 25% of people who played only society lotteries. The cost of playing was also a key factor in the decision-making process of non-lottery players - 44% rating it as very important. A key distinction between lottery players and people who did not play any lotteries was the importance they placed on the odds of winning a prize: more than a third of non-lottery players (35%) rated it as very important – second-most important behind the cost of playing - compared to just 18% of lottery players. This suggests that the low odds of winning and the cost of playing were deterring non-lottery players from participating.

However, these findings from the survey on motivations for playing the lottery contradicted some of the views expressed by stakeholders during interviews. Lottery stakeholders - both society lottery stakeholders and National Lottery stakeholders - believed that ticket demand was centred around prizes. Society lottery stakeholders argued that, without the ability to have higher jackpot prizes, they would struggle to grow their player base. Notably, the ability of PPL to offer six-figure jackpot prizes was cited as a key factor in their recent growth. From the National Lottery’s perspective, this has given rise to their concerns about growing competition and – in their view – potentially misleading advertising by large society lotteries through highlighting the total prize pot rather than the winnable maximum prize.

Related to this, the National Lottery was also concerned that any reduction in its own player numbers due to society lottery competition in the higher prize space would have a cumulative negative impact on the National Lottery as their ability to have large jackpots is reliant on having a large number of players.

Knowledge of good cause donations

Despite believing that funding good causes is important, people tend not to know what proportion of ticket sales is given to funding them. Less than a third of respondents (27%) thought that they knew roughly what proportion of ticket sales went towards good causes. However, when this was tested as part of the survey, of those who believed they were correct, only 34% knew what proportion was donated by the National Lottery and just 19% knew the proportion donated by society lotteries.^{[footnote 37]}

There was a general tendency to underestimate how much money is given by society lotteries to good causes - 42% of people who thought they knew provided an underestimate. However, when presented with the actual proportions given by society lotteries, 32% of society lotteries players, 19% of people who only played the National Lottery and 11% of non-lottery players said they would increase their spending on society lotteries. This illustrates the importance of good cause donations to consumers.

By contrast, among National Lottery players, more people said that they would decrease their National Lottery spending (21%) than increase it (8%) after being shown the proportion that the National Lottery gives to good causes.

Figure 8: Changes in consumer society lottery spending after being informed of proportion of revenue donated to good causes

How people’s spending changed after being told how much society lotteries give to good causes

Lottery played	Spend more (% of people)	No spending change (% of people)	Spend less (% of people)
Both the National Lottery and society lotteries	32%	50%	18%
Society lotteries only	32%	40%	28%
The National Lottery only	19%	81%	0%
No lotteries	11%	89%	0%

4. Lotteries and other gambling behaviours

The findings in this section draw on both the consumer survey and the charity sector survey, as well as from stakeholder interviews.

Lotteries and gambling participation

Results from the survey of consumers show that around 53% of people who played lotteries also participated in another form of gambling, which is significantly higher than the 16% of non-lottery players who participated in a different form of gambling. However, this hides the variation according to the type of lottery played and the fact that participating in another form of gambling was much more prevalent among people who only played society lotteries (79%).

Table 3: Other gambling participation by type of lottery played

Type of lottery	Other gambling participation rate
The National Lottery only	38%
Society lotteries only	79%
No lotteries	16%

The most common gambling activity played by people who played only society lotteries were slot machines and other arcade games (27%) followed by bingo (25%), betting (24%) and casino games (21%). In comparison, for people who played only the National Lottery, betting (15%) was played by more than 10% of people. Bingo (7%), slot machines (4%) and casino games (4%) were much less popular among people who said they only played the National Lottery - although this is in line with rates of participation expected from national statistics produced by the Gambling Commission as part of the Gambling Survey of Great Britain.

A majority of lottery players consider playing the lottery to be a form of gambling; 66% consider the National Lottery to be gambling and 62% consider society lotteries to be gambling.

However, there are again some interesting splits according to which type of lottery people play, as well as a trend that people are more likely to consider the type of lottery they play to be gambling:

• People who only played the National Lottery were the most likely to consider lotteries to be gambling; 75% considered the National Lottery to be a form of gambling compared to 65% who felt that society lotteries were a form of gambling;
• By contrast, 70% of people who were only society lottery players considered society lotteries to be a form of gambling, but only 41% considered the National Lottery to be gambling;
• Among people who played both lotteries, the National Lottery was more likely to be seen as a gambling activity (60%) than society lotteries (51%); and
• Around two-thirds of non-lottery players considered both the National Lottery (67%) and society lotteries (65%) to be gambling.

For those who did not consider lotteries to be a form of gambling, the most commonly cited reasons were that lotteries are not as addictive as other gambling products (28%), that some of a lottery’s revenues goes towards good causes (26%) and because playing the lottery does not involve betting (25%).^{[footnote 38]}

Interviews with lottery stakeholders revealed that there is concern with competition from both within the lottery sector and the wider gambling sector, especially as the current economic climate may make people spend less and often have to choose between different types of gambling products. 

Among survey respondents who considered lotteries to be a form of gambling, the most common reason to choose to play lotteries over another gambling product was that some revenues go to good causes (29%).

Around a fifth of people also stated that it was because:

• lotteries are cheaper than other forms of gambling (22%),
• there is less social stigma around lotteries than gambling (21%), and
• there is a chance of winning smaller prizes in the lottery, even if you don’t win big (19%)

Gambling participation and lottery playing behaviour

The consumer survey also provides evidence of how lottery playing behaviour differs between people who participate in non-lottery gambling activities and those who do not. 

A greater proportion of lottery players who gamble on non-lottery activities placed importance on the size of maximum prize when deciding to play a lottery (30%) than lottery players who said they did not gamble on non-lottery activities (14%). However, this difference was largely driven by people who only played society lotteries, for whom the difference between those who gamble on non-lottery activities and those who do not was much larger than for people who either only played the National Lottery or played both types of lottery (see Table 4).

Table 4: Percentage of people who rated the size of the maximum prize as an important factor in their decision to play a lottery

Type of lottery	Gambles on non-lottery activities	Does not gamble on non-lottery activities
Society lotteries only	50%	20%
The National Lottery only	59%	55%
Both the National Lottery and society lotteries	48%	45%

Among people who only played society lotteries, there was also a distinction between participants in other types of gambling and non-participants on the importance placed upon the good causes that lotteries donate to.

This distinction was not seen among people who only play the National Lottery:

• 18% of people who only played society lotteries and gambled on non-lottery activities rated the good causes as very important, compared to 59% of those who did not gamble on other products. 
• However, among people who only played the National Lottery, similar proportions rated the good causes as very important: 20% of people who gambled on non-lottery activities and 23% of people who did not.

This trend was also apparent when people were asked whether they would increase their spending on society lotteries if their maximum prizes were larger. Respondents who gambled on non-lottery activities were more likely to increase their spending if the prize increased (37%) than people who did not gamble on non-lottery activities (22%). Again, this gap was much more significant among people who only played society lotteries: 61% of those who also gambled on other products would increase their spending if the prize increased, compared to 19% of people who did not. Among people who only played the National Lottery, the proportions were 32% and 24% respectively.

Overall, the survey results show a trend that, among players of only society lotteries, the motivation for playing differs significantly depending on whether they also participated in other types of gambling. For those that did, the prize offered was more important and the society lottery’s good causes were less important. For those that did not participate in other types of gambling, the opposite was true. Moreover, the differences seen between participants and non-participants in other gambling products among players of only society lotteries was not seen among people who played only the National Lottery or who played both types of lottery.

Gambling harms

There is a general belief within the charity sector that lotteries are less harmful than other gambling products - a view shared by 74% of charities surveyed as part of this research. Stakeholder interviews of charities receiving society lottery funding also revealed that, although there is a reputational risk of being associated with a form of gambling, it is mitigated by the lotteries’ commitment to providing a responsible gaming environment; under their licence conditions, lotteries must have player protection measures in place. However, the survey found that there were still 19% of charities that did not want to run their own lottery because of concerns over gambling harms.

The survey of consumers found that, based on the Problem Gambling Severity Index (PGSI), society lottery players were more likely than National Lottery players and non-lottery players to be at high risk of experiencing gambling harms, defined as having a PGSI score of 8 or higher.^{[footnote 39]} Just 4% of people who played only the National Lottery were at high risk of experiencing gambling harms, which is a similar rate to that of non-lottery players (4%). However, this rose to 28% for people who played both the National Lottery and society lotteries and to 52% for those who played only society lotteries.

One important factor to consider when interpreting this data is the impact of participating in non-lottery gambling activities. In general, it is clear from the consumer survey that respondents who played some form of non-lottery gambling product are more likely to be at high risk of experiencing gambling harm. For people who do not play any lotteries, 12% of those who participate in a non-lottery gambling activity are still at high risk of harm. Among people who only played the National Lottery, 11% of those who participated in other non-lottery gambling activities were at high risk of gambling harm compared to 2% of those who did not participate in another gambling activity. However, there was a stark difference among people who only played society lotteries: 3% of those who did not participate in non-lottery gambling activities were at high risk of harm - similar to National Lottery players and non-lottery players - but 87% of those who also participated in other gambling products were at high risk of harm.

These figures on gambling harms in the consumer survey are noticeably higher than those found by the Gambling Survey of Great Britain. This is likely to be due to the sample of survey respondents skewing towards higher gambling participation than is found in the general population. As a result, caution should be taken when interpreting these findings.

Looking at both the data on potential gambling harms and the data on gambling behaviours, there is evidence to suggest that there are two types of society lottery players: 

• one group plays society lotteries to contribute to good causes and is likely to have a low risk of gambling harms similar to that of National Lottery players; and 
• a second group that is motivated to play society lotteries by prizes and is much more likely to be at higher risk of gambling harms.

Challenges to the lotteries market from prize draws

Stakeholder interviews revealed concerns that the lotteries market is facing a challenge from the free prize draw sector. Commercial prize draws like Omaze may seem like a gambling product but because they offer a free entry route are not legally classified as a gambling product. Although they operate in much the same way as lotteries, they are not licensed by the Gambling Commission and are not required to fund good causes.

Society lottery stakeholders expressed that they wanted regulations and licensing to be introduced for prize draws and to also be able to increase their own prizes as they believed these draws were competing for customers with lotteries. The consumer survey showed that lottery players were more likely to have heard of prize draws (63%) than non-lottery players were (56%), and that they were also more likely to have played a prize draw - 24% versus 11%.

However, survey respondents were not asked about whether they were substituting, or would substitute, their lottery spending for prize draw spending, so it is not possible from this research to say whether the substitution feared by lottery stakeholders is taking place.

Figure 9: People who have played a prize draw- by which lottery they have played

Lottery played	Percentage of people (%)
No lotteries	11%
The National Lottery only	16%
Both the National Lottery and society lotteries	26%
Society lotteries only	45%

5. Regulation of society lotteries

One of the key questions that this research seeks to answer is: What is the current impact of the annual ticket sales limit for society lotteries (which allows annual ticket sales of up to £50 million for each licensed lottery), and what would be the potential impact of either raising that limit or removing it altogether?

Current impact of the annual ticket sales limit

The charity sector survey provided a sample of 34 charities that have run their own society lottery in the period since the annual ticket sales limit was raised from £10 million to its current £50 million level.

Among those 34 charities, 59% saw the annual ticket sales limit as a barrier to fundraising. However, just 29% stated that the limit impacts on their organisation’s ability to raise funds. There is a contradiction between these two numbers. This might be explained by survey respondents interpreting the former as referring to charitable fundraising in general and the latter as referring to their own organisation’s fundraising activities. It is also possible that although they see the annual ticket sales limit as a barrier, they are also able to raise funds through other means and so the organisation’s overall fundraising is not impacted. Further probing on the current impact of the annual ticket sales limit shows that 35% of charities feel that the limit has influenced their approach to running their lottery.

However, the survey did not provide information on how that impact has been felt, and this contrasts with Gambling Commission data on the number of society lotteries approaching the £50 million limit, as shown in Figure 10 below.

Figure 10: Society lottery ticket sales, 2023/2024 (excluding PPL)

Annual ticket sales	Number of society lotteries
£0 to £100,000	160
£100,000 to £500,000	120
£500,000 to £1,000,000	60
£1,000,000 to £3,000,000	55
£3,000,000 to £15,000,000	30
£15,000,000 to £50,000,000	0

Source: Data provided by the Gambling Commission.

Data from the Gambling Commission shows that only lotteries operating under the PPL brand are close to approaching the society lotteries sales limit. In contrast, no other society lottery had more than £15 million in annual sales in 2023/24, and just 8% had annual sales of more than £3 million. Consequently, the impact that the annual ticket sales limit is having on the society lottery sector, with the notable exception of PPL, appears to be extremely limited. Despite this, 68% of charities surveyed that operate their own society lottery surprisingly believe that they will reach or approach the current limit in the next 10 years. However, the survey did not collect information on why they believe this.

Potential impact of an increase to the annual ticket sales limit

Despite the limited number of society lotteries whose sales are impacted by the current annual ticket sales limit, there is a strong appetite for raising the limit among the charities surveyed as part of this research: 69% of all charities surveyed supported raising the limit, while this percentage increased to 72% among charities that run their own lottery. 

Interviews with society lottery stakeholders reinforce this viewpoint. They argued that the growth of PPL has had a huge positive impact on the funding of good causes in the country and that it would be problematic if they missed out on additional funding for good causes that could result from higher ticket sales. For this reason, stakeholders who run their own lottery argued that even if they were not close to the sales limit themselves, because PPL was being impacted, this was a negative for the fundraising sector as a whole. There was also consensus among charity stakeholders in interviews that charities would benefit from the greater returns to good causes expected from a further increase to the annual limit on ticket sales. 

Society lottery stakeholders have also stated that they do not think further increasing the annual ticket sales limit would negatively impact the National Lottery when considering wider gambling market growth and the different nature of society lotteries’ subscription models versus the National Lottery’s retail model.

Regulations around prize limits

Society lottery stakeholder interviews suggested an alternative regulation change of raising the maximum prize limit for society lotteries. They believe that being able to offer higher prizes would attract more players and thus promote expansion of the society lotteries sector outside of PPL. Currently, the single draw maximum prize limit allows society lotteries to offer a maximum of £25,000 or 10% of the ticket sales, whichever is greater. There is also a single draw ticket sales limit of £5 million, which allows prizes up to £500,000. Subscription-based lotteries can foresee the 10% amounts ahead of time, but most lotteries are a mix of subscription and pay-as-you-go models, making it difficult for them to predict 10% of sales amounts prior to the draw. Interviewed stakeholders disliked having to estimate ticket sales ahead of offering prizes and saw the rule as artificially keeping sales down. This is because, in order to avoid breaching regulations, they must be conservative in setting the maximum prize level.

Stakeholders believe that the ability to offer larger prizes would allow lotteries, especially the smaller ones, to attract more players and bring in more funding for their good causes. The survey results offer some support for this view, as people who do not currently play a society lottery are more likely to value larger prizes highly (see above). Moreover, choice experiments in the survey show that if a society lottery were to increase the prize on offer, 40% of current society lottery players would increase their spending, and 22% of non-players would begin playing that society lottery. On the other hand, the experiments also showed that 68% of lottery players and 78% of non-lottery players would not change their society lottery-playing behaviours, even if the maximum prize were to double in size.

However, some stakeholders expressed concerns that any increased revenue from ticket sales would not go towards good causes but into the marketing budgets of large society lotteries. Stakeholders also argued that higher prizes would shrink ‘the clear blue water’ between the National Lottery and society lotteries and undermine the National Lottery’s message of offering life-changing prizes and limit their capacity to reach players.

Substitution between the National Lottery and society lotteries

Some interviewed stakeholders were concerned that increasing the annual ticket sales limit for society lotteries would lead to growth in the sector at the expense of the National Lottery. Looking at changes in the sector in the five years since the previous raising of the annual ticket sales limit, the lotteries sector overall has seen growth which is largely attributable to society lotteries, which grew by 27% (£224 million in sales) between 2019/20 (the last year before the change) and 2023/24. By contrast, National Lottery sales have been mostly stable over this same period, seeing small increases until 2022/23, although there was a decline back to 2019/20 levels in 2023/24.

However, it should be noted that the growth of the society lotteries sector since 2019/20 continues a pre-existing trend from the preceding five years. Between 2015/16 and 2019/20, i.e. before the raising of the annual sales limit, the society lotteries sector was growing slightly faster than after the sales limit increase: 69% growth, or £339 million in sales. National Lottery sales growth over the same five-year period was £289 million (4%). Although this indicates a reduction in National Lottery sales growth since the raising of the annual ticket sales limit on society lotteries, the level of National Lottery ticket sales has often fluctuated, and it isn’t possible to draw conclusions in either direction on the impact of raising society lottery sales on National Lottery sales from this macro-level data.

At a micro-level that looks at consumer behaviour, there are small levels of substitution between lotteries. When asked in the consumer survey about their lottery spending in general, 22% of lottery players said their spending on one lottery was influenced by their spending on other lotteries. When looking specifically at substitution between the National Lottery and society lotteries, 16% of people who would increase their spending on society lotteries if they became more attractive - namely, with a higher prize - would also decrease their spending on the National Lottery in those circumstances.

Figure 11: Lottery revenue, 2008/2009 to 2023/2024

Use zoom on your browser to view.

Figure 11 shows that ticket sales for society lotteries have grown at a steady rate between 2008 and 2024. The National Lottery has also seen an overall upwards trend in ticket sales over this time period, however growth fluctuated.

Impact of increasing sales limits

In this section, we bring together the findings from the evidence review, survey and stakeholder interviews to assess the potential impact of increasing annual ticket sales limits for society lotteries across three key parameters - ticket sales, market share and funding for good causes. It is important to explore the impact of not only the amount of funding for good causes but also the proportion of good causes funding that comes from the National Lottery and society lotteries. This is because they each take different approaches to funding good causes. 

First, the possible trends and dynamics for the current £50 million annual sales limit are explored. This is followed by an assessment of the possible impacts of increasing the annual ticket sales limit to £100 million and, finally, an assessment of the possible impacts of removing the limit altogether.

Each assessment looks at the overall impact across three main areas:

• (i) ticket sales;
• (ii) lottery market share; and
• (iii) good causes funding

Impact of the current £50 million annual ticket sales limit

Ticket sales

Society lotteries

According to Gambling Commission data, the current limit of £50 million does not appear to be a barrier to ticket sales for the vast majority of the society lotteries sector. Excluding the lotteries operating under the PPL brand, no other society lottery has ticket sales of more than £15 million, and only 8% have sales of more than £3 million. 

PPL is able to purchase multiple lottery licences that it operates under its brand. Several of PPL’s current licences have approached the £50 million sales limit recently.

However, interviews with stakeholders acknowledge that the current limit has been an improvement, as there was a larger number of large society lotteries – including non-PPL affiliated lotteries - that would have been impacted if the previous limit of £10 million had still been in place.

The National Lottery

The current annual ticket sales limit does not appear to have meaningfully affected National Lottery ticket sales. Following the increase of the limit from £10 million to £50 million, National Lottery ticket sales actually increased by 4% between 2019/20 and 2022/23. That said, there was a decline in sales in 2023/24, meaning there has been an overall decline in National Lottery ticket sales of 1% in the four years since the current limit was introduced in July 2020. In the four-year period (2015/16 to 2019/20) prior to the introduction of the current sales limit, National Lottery sales increased by 4%, although this masks a 5% decrease in sales in the first three years of the same period.

Of course, it is difficult to disentangle any impacts relating to the sales limit from wider drivers and therefore it is not possible to conclude whether there has been an impact on National Lottery sales since the current sales limit was introduced.

Market share

The National Lottery is currently the dominant player in the lotteries sector, with an 88.1% market share. 

This is a slight decline on its market share of 90.4% before the annual ticket sales limit rose to its current level in 2020. However, there is not enough evidence to draw conclusions on whether changes in market share are due to the sales limit increase.

Meanwhile, within the society lotteries sector, data from the Gambling Commission shows that PPL is dominant. PPL’s £633 million in ticket sales in 2023 accounted for 62% of sales across the whole society lottery sector, which is an increase compared to 2020, when it accounted for 57%. This could be as a result of the increase in the sales limit to £50 million, but there is not enough evidence to draw this conclusion.

Good causes funding

The lotteries sector provided around £2 billion in funding for good causes in 2023/24, with about £1.6 billion coming from the National Lottery and £460 million from the society lotteries sector. 

The National Lottery’s model of offering life-changing prizes to attract players means that a lower share of its revenue is donated to good causes (20%) than by society lotteries (44%). However, the National Lottery also contributes to the Exchequer through a 12% lottery duty (£937 million in 2023/24). 

The good causes that are funded by each type of lottery also differ. Charities that run their own society lotteries are free to use the revenue raised as they wish in support of their charitable objectives. Larger society lotteries, such as PPL and the Health Lottery, also offer general purpose funding to the charities they support that can be used for anything, including operating costs. However, National Lottery funding differs in that it is earmarked for specific projects that charities applied for, and it generally cannot be used by charities for their operating costs.

Impact of increasing the annual ticket sales limit to £100 million

Views from stakeholder interviews and surveys shows that there is an appetite across the society lotteries sector for increasing the annual ticket sales limit to £100 million from £50 million. However, the data shows that only PPL-branded lotteries would currently benefit from an increase. 

Three scenarios for how raising the annual ticket sales limit to £100 million would affect PPL, the society lotteries sector and the National Lottery are considered below.

(i) Continuation of current sales growth trends (baseline scenario)

In this scenario, the annual ticket sales limit is raised to £100 million, but it is assumed that: all other regulations around ticket sales and prize limits remain unchanged; the PPL operating model remains unchanged, including a maximum prize typically of £400,000, 12 monthly draws, 20 society lottery licences and an unchanged proportion of sales distributed to good causes.

Ticket sales

People’s Postcode Lottery (PPL)

Stakeholder interviews indicate that raising the sales limit is expected to lead to a significant increase in sales for PPL. In the short term, each of PPL’s existing licences would have £50 million additional headroom for ticket sales, which means they would no longer have to lower ticket prices when they approach the current £50 million limit and the current expansion of their player base would be able to continue unhindered. 

Ticket sales for the PPL brand have had an annual growth rate of 8% since the previous increase in annual ticket sales limit in 2020. If that current trend were to continue, it would mean an additional £51 million in sales annually from around 382,000 new players (or subscriptions).

There is, however, uncertainty around forecasting the growth of PPL based on current trends. Recent PPL sales growth may not be sustainable, and this could instead represent a rapid expansion phase before a slower period of growth, which could mean the above figures are an overestimate. 

On the other hand, there is also uncertainty in the other direction. For example, the increase to £100 million would mean that there would be no immediate need for PPL to purchase additional lottery licences. Furthermore, it might even lead them to consolidate lottery licences to reduce operating expenses – the impact of which is difficult to predict and model.

Society lotteries (excluding PPL)

Although society lotteries other than PPL will not be directly affected by an increase in the annual ticket sales limit to £100 million, they may be impacted by the growth of PPL. Looking at the change in the size of the non-PPL society lottery sector since the previous 2020 limit increase, there has been an annual growth rate for ticket sales of 1.5%. If that trend were to continue, it would mean an additional £6 million in ticket sales.

The National Lottery

If the annual ticket sales limit were increased but there were no change in PPL’s maximum prize, there is no direct impact expected on National Lottery ticket sales from the increased limit. However, as with PPL, it is expected that trends since the 2020 increase of the annual ticket sales limit would continue. Since 2020, the National Lottery’s ticket sales have had an annual growth rate of -0.3%. If this trend were to continue it would mean a reduction in sales of £25 million annually due to a loss of around 80,000 players.

As with PPL, forecasting changes in National Lottery ticket sales based on current trends carries some uncertainty. The reduction in ticket sales since 2019/20 may just reflect annual fluctuations: although the change across the period was a decline, year-to-year ticket sales increased between 2019/20 and 2020/21, decreased the next year, increased the following year, before decreasing again to 2023/24. This approach also assumes no changes to the products offered by the National Lottery, which may not be the case.

Market share

The above estimated changes to ticket sales would lead to a change in the market composition of the lotteries sector. Based on the continuation of current growth rates, in the first year after any sales limit increase to £100 million National Lottery ticket sales would reduce from £7.80 billion to £7.78 billion – based on a loss of £25 million – and society lotteries ticket sales would increase from £1.06 billion to £1.11 billion – based on £51 million in additional PPL sales and £6 million in additional non-PPL society lottery sales.

In such a scenario, this would lead to the National Lottery’s market share falling from 88.1% to 87.5% and the society lottery market share would increase from 11.9% to 12.5%. PPL’s share of the society lotteries sector would also increase from 62.0% to 64.0%.

Good causes funding

The changes in ticket sales for PPL (an increase) and the National Lottery (a decrease) based on current trends would also have an impact on the amount of money that could be delivered to good causes.

The estimated reduction in ticket sales for the National Lottery would also reduce the amount it could give to good causes by £5 million (based on the current 20.1% of sales that are distributed to good causes). This would be offset by the increase in good causes contributions from PPL of £17 million (based on the current 33.0% of sales that are distributed to good causes) and from non-PPL society lotteries of £4 million (based on the current 59.6% of sales that are distributed to good causes). Overall, good causes donations would be expected to increase by £16 million, although, as discussed above, the destination of those contributions differ between society lotteries and the National Lottery. 

The National Lottery also pays 12% of its sales as Lottery Duty, which means that the estimated reduction in National Lottery ticket sales would lead to a £3 million loss of revenue for the Exchequer.

(ii) Additional sales growth (Scenario 1)

Here, the annual ticket sales limit would again be increased to £100 million and other society lottery regulations are assumed to remain unchanged – as in the baseline scenario. However, PPL is assumed to modify its operating model by raising the size of the maximum prize to £500,000, while still maintaining 12 monthly draws and 20 society lottery licences. They could not do this under current regulations - 12 monthly draws at £5 million maximum sales per draw would breach the current annual £50 million limit.

Ticket sales

People’s Postcode Lottery

If the sales limit were raised to £100 million, PPL would be able to raise the size of the maximum prize by around 20% to £500,000. This is because they would now be able to approach the maximum single draw sales limit of £5 million while still offering a monthly draw (£5 million multiplied by 12 monthly draws is £60 million).

Evidence from the survey of consumers suggests that around 6% of people who do not play the lottery and of people who only play the National Lottery would start playing PPL if the size of the maximum prize increased by 20%. It is estimated that this could lead to an additional £210 million in ticket sales, which is additional to that expected in the baseline scenario above, driven by an influx of new players to PPL (See Annex 4 for details of how this figure is derived). 

In reality, there are reasons to believe that any increase in PPL sales could be lower than this £210 million estimate. We consider these figures to be an upper bound for changes that could occur in the first year after an increase in the annual sales limit to £100 million.^{[footnote 40]}

The National Lottery

Increases in the society lottery annual ticket sales limit and a subsequent increase in PPL prize levels could possibly lead to some people substituting their existing spending on National Lottery tickets with spending on society lottery tickets.

Evidence from the consumer survey suggests that if the PPL maximum prize level were to increase by 20.0% to £500,000, around 0.5% of National Lottery players would respond by replacing their National Lottery spending with spending on PPL. This would be equivalent to a £14 million decrease in National Lottery ticket sales - in addition to that expected in the baseline scenario.

Again, in reality the percentage of consumers who actually substitute their National Lottery spending with society lottery spending is expected to be lower than those who say they would do in the survey.^{[footnote 41]}

Market share

The above estimated changes to ticket sales would lead to a change in the market composition of the lotteries sector. Based on the modelled changes to ticket sales above, National Lottery ticket sales would reduce from £7.80 billion to £7.77 billion – based on a total loss of £39 million, which combines the estimated changes in the baseline scenario with the additional impacts in this scenario. In addition, society lotteries ticket sales would increase from £1.06 billion to £1.32 billion – based on a total of £260 million in additional PPL sales (again combining the estimated changes in the baseline scenario with the additional impacts in this scenario).

This would lead to the National Lottery’s market share falling from 88.1% to 85.4% and an increase in the society lottery market share from 11.9% to 14.6%. PPL’s share of the society lotteries sector would also increase from 62.0% to 70.0%.

Good causes funding

The changes in ticket sales for PPL (an increase) and the National Lottery (a decrease) due to PPL increasing its maximum prize by 20% would have an impact on the amount of money that could be delivered to good causes.

The reduction in ticket sales for the National Lottery would reduce the amount it could give to good causes by a further £3 million. This would be on top of the £5 million expected in the baseline scenario by the continuation of current trends. This would be offset by the increase in good causes contributions from PPL of £69 million, additional to the £17 million expected under current trends. Overall, this would mean a £70 million increase to good causes donations on top of the £12 million expected under the baseline scenario.

The National Lottery’s Lottery Duty payments would also be reduced by a further £1.7 million for a total of £4.7 million less in income for the Exchequer.

(iii) Additional sales growth (Scenario 2)

In this scenario, in addition to the increase in the annual ticket sales limit to £100 million, the single draw ticket sales limit is assumed to increase proportionally to £10 million. PPL is again assumed to modify its operating model by raising the size of the maximum prize, while still maintaining 12 monthly draws and 20 society lottery licences.

Ticket sales

People’s Postcode Lottery

If the single draw limit were also increased to £10 million, this would allow PPL to double the typical size of its maximum prize – up to £800,000 – as the maximum ticket sales they could achieve while maintaining 12 monthly draws would be £8.3 million (£100 million divided by 12 draws) and the limit on the maximum prize is 10% of a draw’s ticket sales.

Compared to Scenario 1 (above) this would allow PPL to - eventually - take full advantage of the £100 million annual ticket sales limit, which would not be possible if the single draw limit stayed at £5 million without changing other aspects of their operating structure, such as the number of draws or the cost of playing.

Evidence from the consumer survey suggests that around 15% of people who only play the National Lottery and 10% of people who don’t play the lottery would start playing PPL if the size of the maximum prize doubled to £800,000. It is estimated that this could lead to an additional £426 million in ticket sales, additional to that expected in the baseline scenario (See Annex 4 for details of how this figure is derived).

However, again, in reality the percentage is expected to be lower and we consider these figures to be an upper bound for changes that could occur in the first year after an increase in the annual sales limit to £100 million.^{[footnote 42]}

The National Lottery

Increases in the society lottery annual ticket sales limit and the subsequent doubling of the maximum prize level offered by PPL would be likely to lead more people to substitute their existing spending on National Lottery tickets with spending on society lottery tickets compared to Scenario 1 (above).

Evidence from the consumer survey suggests that if the PPL maximum prize level were to double to £800,000, around 1.9% of National Lottery players would respond by replacing their National Lottery spending with spending on PPL, which would be equivalent to a £123 million decrease in National Lottery ticket sales, additional to that expected in the baseline scenario from a continuation of current growth trends.

Again, in reality the percentage of consumers who actually substitute their National Lottery spending with society lottery spending is expected to be lower than those who told the survey they would.^{[footnote 43]}

Market share

Under this scenario, the market composition of the lotteries sector would change due to the estimated change in ticket sales from PPL doubling the size of its maximum prize. 

National Lottery ticket sales would reduce from £7.80 billion to £7.66 billion – based on a total loss of £148 million, which combines the estimated changes in the baseline scenario with the additional impacts in this scenario. Also, society lotteries ticket sales would increase from £1.06 billion to £1.54 billion – this estimate is based on a total of £477 million in additional PPL sales (again combining the estimated changes in the baseline scenario with the additional impacts in this scenario).

This would lead to the National Lottery’s market share falling from 88.1% to 83.3% and an increase in the society lottery market share from 11.9% to 16.7%. PPL’s share of the society lotteries sector would also increase from 62.0% to 74.0%.

Good causes funding

The changes in ticket sales for PPL (an increase) and the National Lottery (a decrease) due to PPL doubling its maximum prize would have an impact on the amount of money that could be delivered to good causes.

The reduction in ticket sales for the National Lottery would reduce the amount it can give to good causes by a further £25 million on top of the £5 million expected in the baseline scenario from the continuation of current trends. This would be offset by the increase in PPL’s good causes contributions of £141 million, additional to the £17 million expected under current trends. Overall, this would mean a £120 million increase in good causes donations on top of the £12 million expected under the baseline scenario.

The National Lottery’s Lottery Duty payments would also be reduced by a further £15 million to a total of £18 million less in revenue for the Exchequer.

Summary

Table 5 provides a summary of the estimated impacts described in the three scenarios above. As expected with this type of modelling, there is uncertainty around the estimates and they should be interpreted as approximations of the possible impacts under particular assumptions. 

There are other possible changes that could take place if the annual ticket sales limit were to increase to £100 million. For example, for PPL to take advantage of the additional headroom offered by the £100 million limit, with no change to the £5 million single draw limit, they would have to make changes to their operating model, such as by increasing the frequency of draws from 12 to 20. However, it is difficult to predict whether and how this would occur given that PPL currently operates a monthly subscription approach to ticket sales. Running extra draws would also require greater expenditure on prizes and other operating expenses, but it is unclear whether this could be covered through additional players or whether there would need to be an increase in ticket prices. The uncertainty around how such changes could occur means that scenarios such as this have not been modelled as part of this research.

Table 5: Summary of the impact of the three £100 million annual ticket sales limit scenarios

Assumptions	Baseline	Scenario 1	Scenario 2
Annual ticket sales limit	£100 million	£100 million	£100 million
Single draw sales limit	£5 million	£5 million	£5 million
PPL maximum prize	£400,000	£500,000	£800,000
PPL annual draws	12	12	12
PPL lottery licences	20	20	20
Impacts on ticket sales*	-	-	-
PPL ticket sales	+£51 million	+£260 million	+£477 million
National Lottery ticket sales	-£25 million	-£39 million	-£148 million
Impacts on market share*	-	-	-
Society lotteries market share	12.5% (+0.6ppt)	14.6% (+2.7ppt)	16.7% (+4.8ppt)
PPL share of society lotteries sector	63.6% (+1.8ppt)	69.5% (+7.7ppt)	73.9% (+12.1ppt)
National Lottery market share	87.5% (-0.6ppt)	85.4% (-2.7ppt)	83.3% (-4.8ppt)
Impacts on good causes funding*	-	-	-
PPL good causes	+£17 million	+£86 million	+£157 million
Non-PPL society lottery good causes	+£4 million	+£4 million	+£4 million
National Lottery good causes	-£5 million	-£8 million	-£30 million
Overall good causes funding	+£16 million	+£82 million	+£132 million
Other impacts*	-	-	-
Exchequer revenue via Lottery Duty	-£3 million	-£5 million	-£18 million

*Figures for Scenarios 1 and 2 combine the estimated changes in the baseline scenario with the additional impacts in that scenario. For example, for PPL ticket sales in Scenario 1, £260 million = £51 million from the baseline scenario + £210 million additional impact from Scenario 1 (the numbers may not sum due to rounding).

Impact of removing the annual ticket sales limit

Ticket sales

Society lotteries

In the case that the annual sales limit were removed entirely, it is expected that in the short- and medium-term there would be a similar impact on ticket sales to raising the annual ticket sales limit to £100 million (see above), driven by the fact that only PPL currently operates above the £50 million threshold. 

We also anticipate that, were the annual ticket sales limit removed entirely rather than raised to £100 million, it would have the same outcomes as outlined for all three of the scenarios explored above.

The National Lottery

Similarly, removing the annual ticket sales for society lotteries is expected to have broadly the same impact on National Lottery ticket sales as the limit increasing to £100 million in the short- and medium-term. 

There is also concern from the National Lottery that society lottery ticket sales might grow to a point that they impinge on the National Lotteries sales to the extent that the National Lottery is no longer able to offer the large life-changing prizes that attract players to it. It is not possible to ascertain at which point that tipping point might occur from the evidence collected as part of this research. However, removing the annual ticket sales limit would remove one of the policy levers available to government to protect the status of the National Lottery in the longer term if society lottery ticket sales did grow to that (unknown) tipping point. If the limit were removed there is also the practical consideration that the government would not have the opportunity to evaluate the impact of the more moderate approach of increasing the limit and so would be less able to anticipate any unintended consequences.

Market share

If the annual ticket sales limit were removed, the short- and medium-term impact on lottery market share is expected to be much the same as if the annual ticket sales limit were raised to £100 million (see above). In the long term, the removal of the annual ticket sales limit might lead to PPL comprising an even larger share of the society lotteries market. Equally, it is possible that the lack of an annual ticket sales limit might encourage new organisations to enter the society lotteries market, which would counterbalance the growth of PPL. However, it is not possible to say which scenario is likely to occur from the evidence gathered as part of this research.

Good causes funding

Given that removing the limit is expected to have broadly the same short- to medium-term impact on annual ticket sales as a raising of the limit to £100 million, the impact on good causes funding is expected to be similar to the £100 million limit case. 

However, a complete removal of the limit on annual ticket sales would allow PPL the option to consolidate its lottery licences into a single licence. If this reduced their costs, this would in principle allow for a larger proportion of revenues to be diverted to prizes or good causes than in the £100 million case. However, it should be noted that some stakeholders have raised the possibility that the savings could be diverted to marketing and would not in fact lead to reduced expenses and higher good causes donations.

Conclusion

The primary objective of this research was to assess the current impact of the £50 million annual ticket sales limit for society lotteries and ascertain what impact a potential increase to the limit might have. The findings show that, despite a general consensus among society lottery stakeholders that the limit should be raised, only the largest society lottery – the People’s Postcode Lottery (PPL) and the lotteries operating under its brand – are currently impacted by the annual sales limit. 

Three scenarios were considered for what might happen if the sales limit were to increase to £100 million. In all scenarios, it is expected that there will be growth in ticket sales for PPL and a reduction in ticket sales for the National Lottery, but the scale of the impact varies depending on which accompanying regulations change:

• PPL ticket sales are estimated to grow by between £51 million and £477 million; and
• The National Lottery’s ticket sales are estimated to decrease by between £25 million and £148 million.

The estimated changes in ticket sales would also impact on the market composition of the lotteries sector. The National Lottery’s estimated share of the market would decrease, although it would remain the dominant organisation in the market with more than 80.0% market share in all three scenarios. PPL is estimated to increase its share of the society lotteries market from 61.8% to between 63.6% and 73.9%.

The knock-on impact on good causes funding is estimated to decrease contributions from the National Lottery by between £5 million and £30 million, but it would also increase contributions from PPL by between £17 million and £157 million. Overall, this would lead to a net increase in returns to good causes of between £16 million and £132 million – increases of between 0.8% and 6.5% on current returns to good causes. However, there would be a change in the composition of good causes that are funded. The National Lottery distributes funding for the arts, sport, heritage, and health, education, environment and charitable causes – primarily as grants for specific projects. Whereas PPL provides funding directly to charities across a range of sectors that can be used as they see fit to help their causes. A further impact of a decrease in National Lottery sales would be a reduction in how much is paid in Lottery Duty to the Exchequer of between £3 million and £18 million. 

Removal of the annual ticket sales limit is expected to have a similar impact to increasing it to £100 million, with two notable exceptions. First, it would remove the need for PPL to operate multiple lottery licences, which could lead to a reduction in their operating expenses. This could – but is not guaranteed to – lead to additional contributions to good causes. Secondly, although the short- to medium-term impacts on sales and market shares would likely be similar to those seen in any sales limit increase to £100 million, in the longer term, removing the annual ticket sales limit would remove one of the policy levers available to government to protect the status of the National Lottery. There would also be nothing preventing society lottery sales from reaching a tipping point where National Lottery sales are impinged to the extent that they can no longer offer the life-changing prizes that attract consumers to play.

However, assessing where that tipping point may be is beyond the scope of this research.

What this research makes clear is that the outcome of raising or removing the annual ticket sales limit for society lotteries will depend on several other factors. This includes, but is not limited to, the single draw ticket sales limit, the maximum prize offered per draw, the extent to which operators change their operating model to make use of extra headroom e.g. introducing additional draws), and the extent to which multi-licence operators use the extra headroom to consolidate the number of licences that they hold.

Annex 1: research questions

Question 1

What is the degree of substitution between SL and TNL products?

• a. What are the main drivers of SL sales?
  • i. At what prize level does a society lottery become competitive with TNL draws, particularly jackpots?
• b. What are the main drivers of TNL sales? 
  • i. What is the minimum size of jackpot that consumers need in order to play? At what level of sales is TNL no longer able to generate this size of jackpot?
• c. Which countries have a similar lottery model to that of the UK? What measures do these countries use to ensure other products do not dominate their lottery markets? How many lotteries can a country with a national lottery sustain?

Question 2

What is the degree of substitution between different SL products?

• a. Why do customers choose one SL over another? How much brand loyalty is there? What is the level of competition?

• b. How do other countries manage competition and the risk of monopolisation in their SL market? Which countries have similar SL markets to the UK?

• c. Is there a tipping point where one SL gets so big it crowds out other SLs?

Question 3

• a. How would the following groups be affected:

  • i. Customers - how might an increased sales limit impact consumer purchasing behaviour?

  • ii. Society lotteries (of all sizes) - to what extent is there potential for further expansion in the SL market? How many SLs are close to the current sales limit? How many SLs are creating trusts/buying licences so that they can sell additional tickets? What are the impacts of creating umbrella structures on SLs? i.e. logistical issues, regulatory compliance, costs.

  • iii. The National Lottery - How have TNL been impacted by prior sales limit increases? How have TNL been impacted by the use of umbrella structures within SLs? How might TNL be impacted by changes to the sales limit?

  • iv. Charities and returns to good causes - What SL proceeds go to good causes? This includes differences in the type of charity funds are donated to and the amount of funds. How have previous sales limits impacted funding for charities and good causes? Which charity sectors might lose out/gain with an increased sales limit? How many SLs do we expect to exceed £50 million sales if we were to increase the limit, and by how much?

• b. How might several options for increasing the sales limit impact the lotteries market, i.e. keeping the £50 million limit vs a £100 million limit vs no limit?

Question 4

Recommendations for future research and development of the evidence base.

• a. Where are the data gaps within the current research and evidence base?
• b. How might we fill these gaps in order to answer how a change in the sales limit may impact the lottery market?

Annex 2: other areas of interest in society lotteries policy

There are some aspects of the society lotteries market that were not the focus of this research, but that were raised by stakeholders. They are recorded here for completeness and may warrant further research into them.

Barriers to society lottery growth

Stakeholders interviewed said there were several barriers to market growth of society lotteries, including regulations around prizes and ticket sales, the impact of free commercial prize draws and the 10% rule on prizes. It was mentioned that lotteries are the only gambling activity that is regulated in terms of how much operators are allowed to sell and offer as prizes. Stakeholders believe this leads to a gap between the funds actually raised for good causes and what could be raised given the demand in the sector. Stakeholders also feel that lower prize levels may put people off from playing and directly hamper many essential sectors such as Air Ambulances and Hospices, which rely heavily on lottery fundraising.

Annex 3: survey methodology

Charity sector survey

This survey was conducted online by Censuswide on a sample of 100 senior financial decision-makers in charities. The data was collected between 5 December 2024 and 16 December 2024. 

The survey was developed in order to ascertain:

• 1. The extent to which the charity sector is reliant on lottery fundraising;
• 1. The experience of charities when receiving funding from the National Lottery and/or society lotteries;
• 1. The experience of charities in operating their own society lottery and their views on society lottery regulations.

The survey included a minimum quota of 15 charities that were currently operating their own society lottery -the final sample had 20- in order to ensure robust findings for this sector.

Consumer survey

This survey was conducted online by Censuswide on a sample of 4,017 consumers aged 18+. This sample was comprised of:

• (i) 1,008 people who had only played the National Lottery in the last 12 months;
• (ii) 1,000 people who had only played a society lottery in the last 12 months;
• (iii) 1,005 people who had played both the National Lottery and a society lottery in the last 12 months; and
• (iv) 1,004 people who had not played any lottery in the last 12 months. The data was collected between 6 December 2024 and 18 December 2024.

Consumers were asked about their decision-making around lottery participation and its relationship to their broader gambling behaviour. To ensure that the survey was representative of the lottery consumer and gambling sectors, the survey results have been weighted in order to match the proportion of people who play:

• (i) the National Lottery;
• (ii) society lotteries; and
• (iii) other gambling activities - specifically, these were betting, bingo, casino games, slots and other arcade machines.

The weights for these sectors are derived from the ‘Gambling Survey of Great Britain’.^{[footnote 44]} The weighted and unweighted survey proportions can be seen in the tables below.

Table A1: unweighted and weighted lottery populations

Lottery played	Unweighted proportion	Weighted proportion
Doesn’t play a lottery	24.97%	65.56%
The National Lottery only	24.97%	19.61%
Society lotteries only	24.92%	5.03%
Both the National Lottery and society lotteries	25.14%	9.80%

Table A2: unweighted and weighted non-lottery gambling populations

Non-gambling activity played	Unweighted proportion	Weighted proportion
Betting	29.62%	9.88%
Bingo	23.24%	4.57%
Casino games	18.47%	2.89%
Slots and other arcade machines	11.45%	3.23%

Annex 4: estimating the impact of a prize increase on ticket sales

To estimate the impact that a 20% or 100% increase in the maximum prize offered by PPL would have on ticket sales, the following approach was taken.

Estimating the impact on PPL sales

Step 1

The first step was to estimate the population of people who do not play PPL, but who have heard of it, namely, people for whom there is a reasonable plausibility that they might begin to play PPL if circumstances changed. 

This is done by taking the number of people who either do not play a lottery or who only play the National Lottery from the Gambling Commission’s ‘Gambling Survey of Great Britain 2023’ and multiplying it by the proportion of people in those two groups who are familiar with PPL, which is obtained from the consumer survey results. 

This gave an estimate of around 13.7 million people who do not play a lottery and were familiar with PPL, and 5.1 million who only played the National Lottery and were familiar with PPL.

Step 2

The next step was to estimate how many of the population from Step 1 would begin playing PPL if the maximum prize were to increase by 20% or 100%. 

This question was asked of respondents in the consumer survey and the results show that 10.7% of people who did not play a lottery and 9.6% of people who only played the National Lottery would begin playing PPL if the prize were to increase by 20.0% and an additional 16.9% of people who did not play a lottery and 25.0% of people who only played the National Lottery would begin to play if the prize were to increase by 100%.

Multiplying these proportions to the population figures from Step 1 gave a total of 1.96 million people who would start to play PPL if the maximum prize increased by 20% and 3.6 million people if the prize increased by 100%.

Step 3

The final step was to estimate the total additional annual ticket sales by PPL. 

This was done by calculating the average spending on tickets per PPL player using the total volume of sales, £632 million, and the total number of players, 4.8 million people, from the ‘People’s Postcode Group – Annual Report 2023’, which gave an average spend of £133 per person.

Multiplying this figure to the population from Step 2 gave an estimated £260 million in additional annual ticket sales by PPL if it were to increase its maximum prize by 20% and additional £477 million in sales if the prize were to increase by 100%.

Estimating the impact on the National Lottery’s ticket sales

Step 1

The first step was to estimate the number of National Lottery players who would replace their National Lottery spending with PPL spending if the latter increased its maximum prize by 20% or 100%.

The results of the consumer survey show that the proportion of people familiar with PPL who would substitute their National Lottery spending for PPL spending if the prize increased by 20.0% was 0.5%, and 1.9% if the prize increased by 100.0%. 

This proportion could then be applied to the number of National Lottery players obtained from the Gambling Survey of Great Britain to give approximately 130,000 people who would substitute their National Lottery spending for PPL spending if it increased its maximum prize by 20% and 480,000 people who would substitute if the maximum prize increased by 100%.

Step 2

The next step was to estimate by how much National Lottery sales would be reduced.

Using the total number of National Lottery players from the Gambling Survey of Great Britain, the average spending by National Lottery players could be calculated.

This was then multiplied by the number of people estimated to substitute their spending from Step 1 to give an expected £39 million reduction in National Lottery sales due to people switching their lottery spending to PPL if they were to increase the maximum prize by 20%, and an expected £148 million reduction if the maximum PPL prize increased by 100%.

1. Alongside these increases, the Gambling Commission introduced greater transparency measures, requiring society lotteries to provide more information to consumers about the use of proceeds and the likelihood of winning a prize. ↩

2. Gambling Commission (2024) Industry Statistics – November 2024. ↩

3. Gambling Commission (2024) Industry Statistics – November 2024. ↩

4. Gambling Commission (2024) Industry Statistics – November 2024. ↩

5. Gambling Commission (1994) Director-General of the National Lottery: annual report 1993/94. ↩

6. Response to Written Question for DCMS (2024) Lotteries: Charities. ↩

7. Gambling Commission (2024) Industry Statistics – November 2024. ↩

8. Regulus Partners (2023) The €10 Billion Opportunity: the potential benefit for civil society across Europe from charity lottery fundraising. ↩

9. Swedish Gambling Authority (2016) Lotteries Act ↩

10. It is important to note that the UK government has made an active decision not to tax prize winnings. ↩

11. Legal 500 Country Comparative Guides 2024, Germany: Gambling Law. ↩

12. DCMS (2018), Response to Consultation on Society Lotteries ↩

13. For the National Lottery this is the total of Retailers’ commission, Costs and Operator Profit. ↩

14. This data only relates to how lottery proceeds (ticket sales) are spent. Good causes may fund some or all of their lottery expenses and prizes from other sources. ↩

15. nfpSynergy (2018) People’s Postcode Lottery: Funding for impact. ↩

16. Arts Council England (2018) Response to DCMS Society Lottery Reform consultation ↩

17. Booth et al. (2020) Gambling-related harms attributable to lotteries products. ↩

18. nfpSynergy (2021) Responsible Play - Charity Lotteries and gambling related harms: a call for proportionate regulation ↩

19. At-risk gamblers are defined as those who score between 1 and 7 on the PGSI. ↩

20. PHE (2023) Gambling-related harms: evidence review. ↩

21. Gambling Commission (2024) Gambling Survey for Great Britain - Annual report (2023): Official statistics. ↩

22. Lockwood et al. (2024) What Drives Demand for State-Run Lotteries? Evidence and Welfare Implications. ↩

23. PHE (2023) Gambling-related harms: evidence review. ↩

24. Brochado et al. (2018) Gambling behavior: Instant versus traditional lotteries. ↩

25. Brochado et al. (2018) Gambling behavior: Instant versus traditional lotteries. ↩

26. Kaizeler et al. (2014) The Determinants of Lottery Sales in Portugal. ↩

27. Frontier Economics (2014) The UK betting and gaming market: estimating price elasticities of demand and understanding the use of promotions. ↩

28. Gambling Commission (2014) Market advice on the lottery sectors. ↩

29. The Lotteries Council (2022) Written evidence submitted to the Digital, Culture, Media and Sport Committee, What next for the National Lottery? Inquiry. ↩

30. DCMS (2019) Government response to the consultation on society lottery reform. ↩

31. Gambling Commission (2024) Industry Statistics – November 2024. ↩

32. People’s Postcode Lottery (2022) Limitless potential: The case for lifting the cap on charity lottery funding. ↩

33. A licensed or registered society or local authority may employ an external lottery manager (ELM) to manage all - or part of - its lottery. An ELM is defined as someone that is a person or a body who makes arrangements for a lottery on behalf of a society or local authority but is not a member, officer or employee of the society or authority. ↩

34. Gambling Commission (2020) Advice: Promoting multiple society lotteries ↩

35. The Wallace Collection (2024) Annual Report and Accounts 2022-23 ↩

36. Population weights for the lottery and gambling sectors were obtained using data from the Gambling Commission’s Gambling Survey of Great Britain. For more detail on this approach, please see Annex 3. ↩

37. Respondents were asked the proportion of sales given to good causes for the society lotteries sector as a whole. However, as seen in the evidence review, there is large variation in the proportion given by individual society lotteries - ranging from 20% (the statutory minimum required) to 96% in 2023. In 2023, the People’s Postcode Lottery – the largest society lottery brand – gave 33% of its sales to charities. ↩

38. It is possible to bet on lottery outcomes through some commercial betting companies. However, this is not possible for the National Lottery or society lotteries. ↩

39. Gambling Commission (2021) Problem gambling screens ↩

40. In reality, the number of people who actually make the behavioural changes they say they would in a survey is expected to be lower than found in the survey. Possible reasons for this include hypothetical bias, where people are more likely to agree to a behavioural change in hypothetical situations than in real life, whereas the reality of spending more money is likely to act as a deterrent. Moreover, while in a survey context consumers are given perfect information, in practice there is imperfect information available to consumers. For example, if PPL’s maximum prize did increase, not all consumers would be aware of the change. The monetary figure should also be considered an upper bound as the calculation assumes the new PPL players would spend at the average level of PPL players – however, it is feasible that newer players might, at least initially, spend less than the average. ↩

41. See Footnote 10 ↩

42. See Footnote 10 ↩

43. See Footnote 10 ↩

44. Gambling Commission (2024) Gambling Survey for Great Britain - Annual report (2023): Official statistics ↩