Charity lotteries in Europe
Almost every country in Europe benefits from the work of charity lotteries at a local level. These are frequently organised by clubs, NGO’s and associations themselves. However, charity lotteries that operate on a national scale are much less frequent in Europe. The main reason is that governments tend to protect their state lotteries as monopolies and legislation blocks the existence or expansion of charity lotteries to prevent “competition” with their state lotteries.
ACLEU regrets such discriminatory measures. Charity lotteries are a crucial source of fundraising for many charities, clubs, associations and NGO’s as evidenced in countries such as the Netherlands, Sweden, UK, Ireland, Norway, Spain and Germany, where charity lotteries are allowed to operate under a nationwide licence.
EU policy for Charity lotteries
Lotteries in Europe are primarily subject to national licensing regulation due to their specific nature, which require national competencies. Crucially, the EU Service Directive does not apply to gambling activities, including charity lotteries, due to the particular nature of these activities, which entail implementation by Member States of policies relating to public policy and consumer protection.
This does not mean that the rules of the EU Treaties, such as the freedom of establishment and the freedom to provide services, do not apply under all circumstances. Member States are only allowed to impose restrictions on these freedoms (such as a monopoly or a limited number of licenses) if these restrictions can be justified by imperative requirements in the general interest.
Furthermore, lotteries remain subject to EU legislation when it comes to some operational aspects of their business. This, for example, is the case for EU legislation on advertising, privacy and anti-money laundering rules. We discuss some of these issues in detail below.
Over the past 30 years, the EU has increasingly stepped up its regulation and supervision of anti-money laundering (AML) rules. While this framework is mostly aimed at the financial sector, other sectors are increasingly brought under the EU's AML framework. Since 2015, this includes all gambling services, although many member states have used the option to exempt some forms of gambling with a low money laundering risk at a national level, such as charity lotteries.
The EU regularly assesses sector-specific risks through a Supra-National Risk Assessment to justify such sectorial exemption. In our view, the risk of money laundering through charity lotteries is minimal due to a range of mitigating factors. These mitigating factors typically include but are not limited to: modest monetary pay-outs (with a focus on in-kind prizes); limited number of draws; subscription-based participation; no anonymous and in-person participation; no intermediaries (such as newspaper shops); automatic pay-out of monetary prizes on the bank account from which the lottery ticket was bought.
EU's legislation on ePrivacy is intended to improve the privacy of persons in the field of electronic communications services and includes direct marketing communications. This is an important marketing channel for charity lotteries, which helps raise funds for charities to benefit society.
Protecting the privacy of persons when using electronic communications is necessary and should be respected. At the same time, too strict provisions on the use of electronic communications would pose a threat to the fundraising capacity of charity lotteries and other fundraisers such as NGO’s and associations, which should not be considered as commercial marketing calls. Requiring prior consent (opt-in) or the use of marketing 'prefixes', would impact the fundraising by and for charities.
Another development is the introduction of so-called electronic ID’s which are used for online identification. The European Commission announced new proposals to enhance the current Regulation on Electronic identification, stemming from 2014. If this framework would become more widely used, it could mean that operators such as charity lottery would need to comply with national Know-Your-Customer requirements, such as age verification. Currently, the proposal only requires very large platforms (45m+ users) to use this new eID.
Digital policy (DSA/DMA)
Since it is necessary, for overriding reasons of public interest, to regulate gambling activities and lotteries at the national level, which is not compatible with the EU rules on the free movement of services. Therefore, charity lottery services are currently exempted from the e-Commerce Directive, which explicitly excludes from its scope gambling activities ‘which involve wagering a stake with monetary value in games of chance, including lotteries and betting transactions.’ The Digital Services Act (DSA) will amend the e-Commerce directive. ACLEU wants to make sure the current exemption is not at risk. We are concerned a revision would affect the exclusive national competencies to regulate gambling activities.
Furthermore, the notion of “illegal content” should be covered by the scope of the Digital Services Act and subject to the proposed duty of care and notice and takedown provisions. The mention or regulation of gambling and betting services in the light of “illegal content” falls outside the scope of the DSA and should remain in the hands of the member states.
Charity lotteries provide independent and sustainable funding for charitable organisations. Charity fundraising should not be seen as a side effect of national gambling policy - it the core mission, the raison d'être, of charity lotteries. National gambling policy should reflect this unique role, and EU policy should respect this division of tasks from the principle of subsidiarity.
In 2020, our members supported over 12.000 projects and civil society organisations with more than € 800 million by selling lottery tickets. At a time when funding and space for civil society are under pressure for political and economic reasons, it is essential to defend this form of non-earmarked, long-term funding.
The members of ACLEU are pleased to see a growing recognition at the EU institutions of contributions to society from lotteries. They will continue their efforts in increasing awareness for the concept of non-governmental charity lotteries, next to state lotteries, as sustainable funding mechanisms for civil society organisations throughout the EU.