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FEATURE
LEGACY LOTTERIES ARE AT RISK OF CANNIBALISATION
As prize draw products flood the UK lottery market, stakeholders insist they should face more regulatory scrutiny. But is there a risk regulation could stifle innovation in the sector – and is there much further for lottery to climb? By Nicole Macedo
T oday it’ s nigh on impossible to scroll through social media apps without being hit by a targeted ad for a“ chance to win a million-pound house” in the UK. The likes of Omaze and Raffle House have taken the lottery sector by storm, after the prize draw vertical seemingly appeared out of nowhere a couple of years ago.
But in a Q3 gambling activity update from the Gambling Commission, player data suggested these prize draw offerings could be cannibalising traditional lotteries in the UK.“ We’ ve seen the growth of large-scale prize draws and that growth has been very significant,” Gambling Commission CEO Andrew Rhodes told attendees of the Betting and Gaming Council’ s AGM on 27 February.
He noted that prize draw products are experiencing a participation level that is much higher than that of other gambling products, or products regulated as gambling.“ It’ s getting close to being on a par with betting in terms of participation, also in terms of the average spending,” Rhodes said.
The UK Lotteries Council, a body that represents the sector, has called for a re-evaluation of the currently largely unregulated prize draw vertical. It should fall under traditional lottery regulations, it says.
“ If there is a shift from society lotteries to unregulated prize draws, returns to good causes will inevitably decline. Million-pound prize draws represent the thin end of the wedge in lottery-based civil society fundraising,” Lotteries Council chair Tony Vick wrote in a March report on prize draws and charity lotteries.
But James Miéville, executive director at Raffle House, a prize draw operator in the UK, says he does not believe the product is in competition with the National Lottery, as it is instead attracting an entirely new demographic of players.
“ We believe companies such as ours have tapped into a previously unmet demand, and that this has attracted new players rather than pulling players away from other products,” says Miéville.“ Our player data suggests the audience for house prize draws is more diverse than that of lotteries.”
Today, prize draws offer a“ free to enter” option, whereby players can send in an entry to a draw, only paying to send the entry. This means the vertical is exempt from falling under lottery rules as per the Lotteries Act. Also writing in the Lotteries Council report, Member of Parliament for Aldridge-Brownhills, Wendy Morton, warned these new games had become“ indistinguishable” from charity lotteries, which are required to meet strict standards, like not offering large prizes or jackpots, and paying back a certain percentage of earnings to charity. The case against prize draws, which are typically offering multimillion-pound prizes to players, is clear: they should be properly regulated, so the traditional lottery sector claims.
HEALTHY COMPETITION
But others support the innovation behind the new vertical; after all it is clearly appealing to a new demographic that more traditional lotteries have ignored for decades. Could this feud be exactly what lotteries need to reinvigorate the industry?
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