Good news for good causes

On 22 August Camelot, the operator of the National Lottery, lost its High Court action to challenge the legality of the Health Lottery. The Health Lottery is operated for and on behalf of 51 local society lotteries that support health-related causes.

Camelot claimed that the Health Lottery operated as one lottery and breached limits on prizes and proceeds, and the prohibition on personal gain as prescribed by the Gambling Act 2005. It had applied for permission to bring a claim for judicial review of the Gambling Commission’s decision in 2010 to grant operating licences to the Health Lottery.

Three months after Camelot’s application the commission announced that it would be conducting a statutory review of the licences, looking in particular at the marketing and presentation of the Health Lottery in light of the apparent public perception that it is one society lottery. As a result, Camelot applied to amend its application, arguing that the commission should include consideration of issues of control and accountability of the 51 societies in its review.

At the trial the commission successfully argued that the Health Lottery is a series of lawfully constructed and licensed multiple society lotteries, and that Camelot’s application was an unfair attempt to interfere with the commission’s exercise of its statutory discretion. This position was echoed by the Health Lottery and the 51 community interest companies which maintained there could be no question of a breach of the limits on prizes and proceeds in the act. They also argued that any profit made by the Health Lottery was de minimus and fell within the parameters of permissible lottery management fees prescribed by the act.

In his decision Burnton LJ refused Camelot permission to proceed with its claim on the grounds of delay and its failure to establish a claim with a real prospect of success. He agreed with the commission that the question as to whether multiple society lotteries should be allowed is one for Parliament and that they are not prohibited by the act.

In reaching this decision the judge considered in detail Camelot’s argument that the Health Lottery falls foul of section 19 of the act which prohibits societies such as community interest companies being conducted for a commercial purpose. On this point he upheld the commission’s view that none of the community interest companies was established or conducted for private gain, and that section 19 focuses on the purpose of the non-commercial society and not on that of the external lottery manager that works for it.

This is the first case to consider the effect of section 19 of the act and the outcome may be of particular comfort to anyone considering a scheme similar to the Health Lottery.

In any event, it is good news for the 51 local community interest companies which are now able to continue with their vital work.

Since the launch of the Health Lottery in October 2011 they have distributed more than £22.3m to good causes.

Louise Woods, an associate in Salans’ dispute resolution group, assisted with this article