The Gambling Commission recently published some guidance for lottery operators who are considering gift card services where purchasers pay for recipients to participate in a lottery or lottery subscription service.

These products can be attractive from a fundraising perspective. They can introduce new players, feel more “fun” than a standard sign-up, and fit well with seasonal campaigns. However, they also create some extra regulatory and practical risks that are easy to overlook. Importantly, the rules and risks are not identical for Remote (for example, online, app or telephone sales and redemption), and Non-remote (for example, in-person sales in charity shops or events, and offline redemption).

Below is an overview of the main issues that any organisation should think about before launching lottery gift cards. It is written in general terms, as how organisations currently operate will vary, and it is not a complete statement of the law.

Remember, you remain responsible for complying with the Gambling Act 2005 and the Gambling Commission’s Licence Conditions and Codes of Practice (LCCP).

Age verification: two people, not one

With a standard lottery ticket or subscription, you usually need to verify the age of one person. Gift cards introduce a second individual because the purchaser and the player are different people. So you’ll have to think about both the person paying and the person actually entering the lottery.

At the point of purchase, anyone buying a gift card that funds lottery participation must be old enough to do so. If the sale is remote, that normally means applying your usual online age checks. If the sale is non-remote, such as in a charity shop, you should ensure staff or volunteers are trained to challenge people they suspect may be underage. The key is that you treat the purchase seriously as a gambling-related transaction, not just a general retail item.

Information for both purchaser and recipient

Gift cards can easily blur what exactly is being bought. It is important that the purchaser understands they are buying entry into a lottery, not a general gift card or a donation.

All the usual requirements apply to the purchaser. They should be signposted to full terms and conditions, prize information, complaints procedures, and safer gambling information.

Where the sale is remote, it should be obvious on the website or app that this is a gambling product.

The recipient should receive clear information when they redeem the card or code. They need to know which society lottery they are joining, how often draws take place, how prizes work, and how they can stop or cancel participation if they do not wish to continue, particularly for subscription-style gifts. They should also have easy access to safer gambling messages and support routes. For remote products this will usually be via the redemption page; for non-remote, it might be through printed materials and a dedicated website.

Self-exclusion and players who should not take part

Self-exclusion is another area where gift products introduce extra complexity. There are two scenarios to consider: when the purchaser is self-excluded, and when the recipient is self-excluded.

If someone has self-excluded from your lottery, they should not be able to participate in gambling with you at all. That includes buying gift products that result in lottery entries, even if the entries are for someone else. Remote systems should be configured to pick up an excluded individual at the point of purchase and prevent the transaction. In a non-remote environment, your process will need to reflect how you record and apply self-exclusions across channels.

When a recipient redeems a card or code, they should be checked against your self-exclusion records just like any other player. If they are already self-excluded, they should not be allowed to activate the gift. You will then need a clear, pre-defined policy on what happens to the funds: whether they are refunded to the purchaser, treated as a donation, or handled in some other way. Whatever your approach, it should be clearly documented and set out in your terms so that it is fair and not misleading.

AML, risk assessments and unusual patterns

Most society lotteries assess their money laundering risk as relatively low, but it still has to be considered properly. Gift cards change some of the dynamics. The person funding the product is not the same as the person playing, and you may see repeated gift card purchases or redemptions that could disguise the true level of activity.

You should update your money laundering and counter-terrorist financing risk assessment to include lottery gift cards, covering both remote and non-remote sales and redemption.

Think about who can buy them, the maximum values and frequency of purchase, whether cards can be bought and redeemed in different channels, and what unusual patterns might look like in this context. Your procedures should spell out how you monitor gift card activity and when you would escalate concerns, including submission of suspicious activity reports where appropriate. Staff and any third-party suppliers involved in the product need to understand that these gift cards sit inside your gambling and AML framework, not outside it.

Credit cards and remote use

For remote gambling, including remote lotteries, credit cards cannot be used to fund participation. Gift cards can accidentally undermine this rule if you are not careful.

Credit cards should be disabled for online purchases. This needs to be built into your payment settings and explained clearly to customers.

For non-remote products, the picture may be different, but you should still think about whether a non-remote purchase could later be used in a way that results in remote entries. If there is any chance of that, a cautious approach is usually safest.

Customer funds and unredeemed gift cards

Another important question is whether you are holding customer funds. If someone pays for a gift card today but the actual lottery entries take place later, you may be holding their money for a period before it is used for gambling. The LCCP requires you to be clear and honest about how customer funds are treated and what level of protection they have.

You should map the flow of money: when you receive it, when it converts into entries, and what happens if the gift is never redeemed. If there is a delay, unspent gift card balances may need to be treated as customer funds, with appropriate disclosures in your terms and on your website. You also need a policy for unredeemed cards, including whether they expire after a certain period and whether the value is then treated as a donation, refunded, or handled in some other way. Whatever you decide, it should be fair, transparent, and explained in plain language.

Final thoughts

Lottery gift cards sit at the intersection of fundraising, gambling regulation and consumer expectations. They can be a useful tool, but they bring extra duties compared with a straightforward ticket sale or subscription.

The points above are not exhaustive, and each organisation will need to consider its own set-up, licences and risk appetite. However, if you are thinking about offering lottery gift cards, it is sensible to step through these areas carefully, update your policies and risk assessments, and be ready to explain to the Gambling Commission how you have ensured compliance.