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Charity Lotteries – A Real Game of Chance or Win/Win for All?

Charity Lotteries – Fake or Real?

Where would a traditional British garden party be without a raffle or some sort of prize draw? It’s what we come to expect of such events. In years gone by, these sorts of competitions would be held to raise money for repairs to local buildings such as churches, or for more altruistic reasons such as to give back to local charities or organizations that need support in times of crisis.

For the most part, human beings are generous and will donate their time and money to causes they feel are worthwhile, or will help benefit them in some way. This notion, has, over the last few years been applied to lotteries, with more and more charities turning to using sophisticated and hi-tech ways of raising money to benefit their causes, whilst also encouraging people to support good works too. But are charity lotteries a good idea, or something that is a real game of chance?

Charity And the World We Live in Now

We’re living in times of uncertainty and increasing economic downturn and everyone, including charities, is suffering. When normal avenues of fundraising don’t seem to be working, or producing enough revenue to keep organizations like these running effectively, they have to turn to more inspired means to help them raise the cash they need. Cue the idea of a charity lottery (or as they are described in the industry ‘society lotteries’). At face value they are simply a way of encouraging people to donate a little of their money on a regular basis, with a chance of winning a big cash payout at the end of it all.

How Are They Monitored?

Charity lotteries are extremely stringently regulated – no two ways about it. In order to register and set up a current charitable foundation with a lottery scheme, you must fill out the same types of registration documents as you would have to if you were setting up a casino that deals with many millions of pounds.

All charity lotteries have to show they’ve made a profit after costs of twenty per cent. For example, if a charity lottery makes £20,000 it’s got to prove it makes an income of roughly £4,000 for the charity after any prizes given out and associated marketing and advertising costs are taken into account. This is fine for long established lotteries, but for newly set up ventures, it’s harder and harder to get started and obtain a foothold in an increasingly competitive marketplace.

If a charity wants to run two draws and advertise in two different forms – for instance online and in print, say in a national or local newspaper, they have to register a different set of regulatory forms to cover both mediums.

Even with all these barriers, charity lotteries continue to grow.

Competition with ‘Real’ Lottery Draws

Charity lotteries will never be able to compete in terms of prize money with the big hitters like EuroMillions and the National Lottery, but nevertheless they have caused consternation among operators like Camelot who have tried to get some of the larger charity draws like The Health Lottery, set up by newspaper magnate Richard Desmond, stopped.

Camelot has actually gone as far as to ask the UK Government to increase the profit margins for charity lotteries from twenty to thirty percent in the past. Such fundraising draws don’t make anywhere near as much money as Camelot to begin with, so to many, this seems a little unfair, but it has obviously worried the main lottery operator enough for them to want to do something to halt the progress of these fundraisers.

Should Prize Money And Profit Restrictions Be Lifted?

Many argue that as the money being raised by charity lotteries is for a good cause, any restrictions on prize money and profits should be lifted entirely. Long term, this could see many such lottery draws become a real competition to the National Lottery and Euromillions, but it would take time and even if they were to become a genuine competitor the proceeds from their sales would have to increase by billions of pounds – not even millions, to be in the same league as Camelot.

The heart of a charity lottery is in its name – it’s for charity, and the amounts of money raised and donated are all ultimately for a good cause, therefore it’s also argued that this is another reason financial restrictions should be lifted.

The Ethics Question

There’s a moral debate at stake too. Some argue that charities who use lotteries to advertise and gain revenue are encouraging people into bad habits with gambling and into wasting money.

In these times of worldwide austerity, it’s a complex and troubling issue. However, there are more positives to take away from charity driven lotteries than there are negatives.

Participating in a regular charity lottery means you’re not only continually donating money to a good cause, and helping to further its aims and missions, but you’re also giving yourself a chance of winning a large amount of money too.

In terms of ethics, supporters of charity lotteries would argue that it is no less morally unjustifiable than a shop giving regular money off discounts on their products or offering you free gifts for continual purchases with them. It’s perhaps an issue that individuals need to take into consideration themselves before they donate or purchase tickets, but it’s one that needs to be debated carefully.

It’s a Win/Win Situation

Even though humans, by nature are generous and altruistic, the possibility of giving a little to gain a lot is something that would encourage even the hardest of hearts to part with their cash.

Charity lotteries are here to stay, that’s for sure, and it’s quite clear they give far more than they ever take.

A properly run, well regulated charity lottery can do far more good for the people it supports and the people who donate their time and money than any other form of fundraising could hope to achieve.