Given the rise of the CIC legal form as the preferred structure for many social enterprises, the story unfolding about the Health Lottery seems one that should concern the social enterprise movement.
I have been trying to follow Third Sector Online’s coverage of the story.
Third Sector reports today that the 20p in the pound that currently goes to good causes will not be increased until Northern & Shell, media owner Richard Desmond’s company — which owns the Daily and Sunday Express titles, the Daily Star, Channel 5 and a number of adult TV channels amongst other things — has recouped its £30m-plus investment. The proportion of revenue going to good causes is less than the national lottery at 28p and much less than the many local lotteries run by hospice societies, where the proportion is often as high as 50p-60p.
But what I didn’t realise — I obviously haven’t been following closely enough — is that the Health lottery is actually operated on behalf of 51 local Community Interest Companies, putting the lottery in direct competition with other small local societies, such as hospices.
Local society lotteries are free of some of the restrictions that apply to a national lottery and in evidence to a recent select committee hearing, Jenny Williams, chief exec of the Gambling Commission, has said it is evident that the Health Lottery was set up in this way in order to enable it to “get around lottery limits”.
All of the 51 CICs have the same three directors and are registered in the same place.
Whatever you think of Richard Desmond, and wherever you stand on the issue of a ‘health lottery’, this seems a dubious useage of the CIC form and not best suited to promoting or protecting its public credibility.
The 5,000th CIC was registered on the 15th April last year and we have many readers whose enterprise are CICs — what do you think?
UPDATE 08/02/12: Perhaps not surprisingly, John Mulkerrin who runs the CIC Association (basically the trade association for CICs) is watching this story closely. He was good enough to send me two documents the CIC Association acquired through FOI requests. The first is a minute of the Gambling Commission regulatory panel which considered the case of Health Lottery ELM Ltd, and the second is Gambling Commission guidance regarding the promotion of multiple lottery societies under one brand.
Further UPDATE 17/02/12: This story continues to develop. The Civil Society website carries a story alleging that the national lottery is losing £1m a week to the health lottery, and also details the complaints about the health lottery received by the Gambling Commission and the Advertising Standards Authority.