The National Lottery has been functional in the United Kingdom since 1994 and has since gone on to incorporate a number of different lottery games for players to enjoy. Initially regulated by the National Lottery Commission, it is now operated by the Camelot Group and regulated by the UK Gambling Commission. Since its inception, anyone residing in the United Kingdom who is over the age of 16 has been able to buy tickets to participate, as well as scratch cards from retail outlets.
Now there are plans in place by the Government to raise that minimum age from 16 to 18, which will also ban online purchases of lottery tickets and scratch cards. Those plans are set to come into force by April of 2021, while in-store purchases for anyone under 18 will be banned by October of the same year.
But how much money will this see the National Lottery lose out on? Do 16-18-year olds currently buy a large portion of the sales of scratch cards and lottery tickets? And if the lottery is missing out dramatically on revenue, how much will also be lost in tax revenue for the Government? Plus, is this likely to significantly reduce the jackpot wins that are available by playing the lottery as a result?
Why Change The National Lottery Minimum Age?
Ministers of the United Kingdom launched a review of some of the country’s gambling laws on December 8. Within that review, new legislation could mean that curbs in advertising gambling and a cap on online betting stakes at casinos are introduced. At that time, the Culture minister Oliver Dowden spoke of the current Gambling Act 2005 as being an “analogue law in a digital age”, due to the fact that it was constructed prior to the arrival of the smartphone.
However, while those particular changes are only potentials, the one concrete measure that was announced by the government is the fact that an increase in the minimum age for lottery participation will be raised. This will mean that anyone who is under the age of 18 won’t be able to purchase lottery tickets or scratch cards. But why was this introduced as a concrete measure to undertake?
Well, concerns were raised over the possibility that the weekly lottery draws and their expansion into the online area, could be a problem where gambling addiction is concerned. As of the moment, the National Lottery, and associated products, is the only gambling product that can be played by anyone under the age of 18 in the country. That is quite the alternative to other countries around the world and exists as an anomaly in gambling law within the UK.
The hope of campaigners is that by increasing the age by which people can participate in lottery games to 18, that there won’t be as much issue with problem gambling in the country. This is a similar call for action as to when campaigners struck out against fixed odds betting terminals (FOBTs) in betting shops. Dubbing them the crack-cocaine of gambling, the FOBTs had the maximum possible bet on them reduced to £2 per round. Obviously, operators and betting shops alike were unhappy with the decision, as there were fears that one third of all retail outlets could experience closure as a result.
How will the increase in minimum age affect the National Lottery? Is it conceivable that such a negative impact will be experienced by it, and subsequently the government where tax revenue is concerned?
How Much Do 16-17 Year Olds Spend On The Lottery?
Figures from the National Lottery in the period between 2017-18 suggest that the 16-17 age group spent £47 million on its games, according to a report from The Times newspaper. Because of the increase in online gambling opportunities, the National Lottery had to adapt alongside, meaning that it started offering online instant-win games via the internet, too. The income from those games and scratch cards equates to 43% of the overall sales – around £3.4 billion.
Of course, once the national minimum age for lottery participation increases in 2021, the portion of that £3.4 billion that 16-17-year olds are responsible for isn’t likely to be brought in by a more frivolous legal age group. Instead, the National Lottery will miss out on the extra revenue. And subsequently, the government will miss out on the 12% tax revenue at the same time.
As it happens though, some people have stated that the change in the minimum gambling age for lottery products should occur sooner than October 2021. Calls have been put forward for it to happen instantly so as to set the wheels in motion straight away. However, the government has not ceded to these particular calls for action.
How will this affect the other areas that the National Lottery operates in and provides for?
Reduction in Amount Donated to Charities and Projects
While it is true that above £47 million in ticket sales for the National Lottery comes from the currently legal 16-17 group, this figure does not account for scratch card and instant win sales purchase online. There is an even higher figure overall that comes from this demographic of player. However, the thing is that the National Lottery also provides for a multitude of necessary projects within the UK.
Over the years, a total of 625,000 amazing projects have received some sort of funding from the National Lottery. Every time someone plays the lottery, some of the money goes towards important work in the communities around the country. Only 1% of the revenue in profit is retained by the National Lottery, while around 95% of it is given back to winners of the draws and society. Around 4% of total revenue is then spent on operating costs, making the UK lottery one of the most cost-efficient in Europe.
Over £42 billion has already been raised for various good causes and projects. Yet, the amount of money given to these projects generally depends upon a variety of factors. Those factors include the mix of games sold, whether the tickets and products are bought online or in-store, as well as the number of unclaimed prizes.
However, for the year ending March 31, 2020, total ticket sales equated to £7,905.1 million. From that, a total of £1,853.1 million was raised for different community projects. A further £4,505.0 million was handed out to winning lottery players. £307.1 million was earned by the retailers of lottery tickets in commission, and the Government took £948.6 million in tax. The funds given to community projects and necessary charities was divided as follows:
- 40% to Health, Education, Environment and Charitable Causes
- 20% to Sport
- 20% to the Arts
- 20% to Heritage
While the percentage being dished out to each of these sectors will likely stay the same, the amount of money being handed out won’t be as much once the age limit rises. That much is pretty much obvious. Of course, the reduction in total ticket sales is something that many people believe the National Lottery can handle anyway.
After all, £7,905.1 million in sales won’t suffer too badly from a £47 million reduction where the 16-17-year olds are concerned. Yet, combining this with the online sales will certainly affect the amount of money that is being handed out.
Camelot’s Own Summary of the Business Impact
The operator of the UK lottery, Camelot spoke of there being various costs involved with the decision to raise the minimum age limit for participation to 18. However, it has agreed to outrightly comply with the decision taken by the government on this. As part of the changes in this area though, Camelot estimates that cost of implementing such will be somewhere between £5.6 million and £8.5 million, using 2019 prices as a guide. However, the annual cost incurred overall by the National Lottery and retailers from a reduction in sales once 16 and 17 play are removed is around £3 million per year.
The total National Lottery sales in the 2019-20 period were £7.9 billion, with £1.8 billion of that being given to good causes. Of those sales, around £40.8 million came from 16- and 17-year olds, which contributed about £6.1 million to good causes from that particular demographic. And while a slight downward trend in sales from that particular age group has been experienced in recent times, the figures were taken from the 2019-20 period for the purposes of the estimations.
Retailers of tickets and scratch cards currently get a small percentage of each sale, which will of course be lost for the 16-17-year olds once the new laws come into effect. The operator (Camelot) also takes a small percentage of the sales, which will be lost in the same way. This is where the total of £3 million per year being lost will be experienced.
During the consultation stage though, Camelot marked the reduction in good cause income as a direct cost to business. However, following additional discussions, it was recategorised as an indirect cost. Currently, 22% of National Lottery sales go to the National Lottery Distribution Fund, which is the average across all National Lottery sales, for all ages and products. This is lower for 16-17-year olds though, as they are proportionately more likely to participate in instant win games than all other age groups.
Benefits of Minimum Age Increase
The biggest benefit that is expected from the increase in minimum lottery gambling age is that it will decrease the level of gambling problems in the UK. However, some have suggested that potentially people under 18 will then substitute lottery gameplay with other gambling products. The most likely comparable substitute (in terms of legality for 16 and 17-year olds at that time, and characteristics of product) are society lotteries. In this case, the Government is considering the minimum age of sale for society lotteries, too.
Adolescence is a key stage of development for humans, and any harms that are experienced during this time of life can be detrimental to future development. The policy of the Government actually aims to ensure that the framework for the National Lottery continues to protect young people from potential risk of gambling related harm. Estimates by GambleAware suggest that the cost of problem gambling to the UK government was between £0.26 billion and £1.2 billion each year. However, it isn’t possible to accurately estimate how much of this is actually able to be attributed to the 16/17 age group.
Strict age-verification checks will be expected to take place by the operator as part of its National Lottery licence, which should see total compliance with the legal age limit when selling products. In retail outlets, the operator is also expected to continue running its mystery shopper program, entitled Operation Child. This identifies retailers who are not conducting suitable age-verification checks, involving over 11,600 visits to retailers each year.
At the same time, the Gambling Commission will closely monitor the level of gambling-related harm across the portfolio of products offered by the National Lottery. An annual participation survey conducted by the Commission is expected to continue, which concerns underage gambling and gaming, thereby assessing the risks associated with such. Through this, it aims to keep a track on how successful the increase in the minimum lottery participation age is when it comes to reducing problem gambling in the UK.
In the end, the increase in the minimum age limit will go ahead regardless. The dates have been set for this to occur in the online and retail spheres. Whether or not the impact will be significant enough for the National Lottery and the UK Government to really take a huge knock remains to be seen.
However, it is more than likely that they will be able to survive through it without any issue. Whether the 16- and 17-year olds can survive without being able to purchase lottery products is altogether another question!