The industry and where the money goes
Charity lotteries are a better donation and a worse gamble, and the statutory prize cap is why they look the way they do.
A charity lottery and a state lottery are the same product under two different legal regimes, and the regimes produce visibly different games. This article compares them on the two numbers that matter — what comes back as prizes, and what reaches the cause — using the operators' own published splits.
In Great Britain a lottery run for a good cause is a society lottery under the Gambling Act 2005. Section 99(2) requires that "at least 20% of the proceeds of any lottery promoted in reliance on the licence" are applied to the society's purposes. Sections 99(3) and (4) cap the scale:
| Limit | Current value |
|---|---|
| Proceeds of a single lottery | £5,000,000 |
| Annual aggregate proceeds | £50,000,000 |
| Maximum single prize | £25,000, or if more, 10% of the proceeds of the lottery |
(Gambling Act 2005, s.99.) The single-lottery and annual limits were raised from £4m and £10m by SI 2020/307, made 17 March 2020 and in force from 7 April 2020.
Two consequences follow, and both are visible in the products.
Society lotteries pay no Lottery Duty. The 12% excise HMRC levies on National Lottery stakes applies to the National Lottery only, so a charity lottery starts with 12p per pound more to allocate.
And the prize cap forces the prize design. A society lottery cannot award any individual more than 10% of that draw's proceeds — at the £5m ceiling, a hard maximum of £500,000 per ticket holder. A larger headline prize cannot go to one person; it has to be split across many tickets. Which is precisely what postcode lotteries do.
The People's Postcode Lottery charges £12.50 a month for entry to every draw in that month, and runs 20 draws a month — one for each of 20 Postcode Trusts.
The corporate structure follows from the caps. Postcode Lottery Ltd is not itself a society: it is an External Lottery Manager licensed by the Gambling Commission (public register, account 829), managing lotteries for 20 separate Postcode Trusts, each holding its own society lottery licence. Twenty societies means twenty × £50m of annual headroom, against 2025 UK ticket sales of £734.8m. One society could not lawfully sell that; twenty can. (The headroom arithmetic is ours; the structure is disclosed by operator and regulator.)
The split, in the operator's own words:
"Currently 31% of the cost of each ticket goes to the Postcode Trust promoting the draw, 40% is used for prizes and 29% is used for our lottery operating expenses."
In 2025 it raised £236.9m for charity on £734.8m of ticket sales — 236.9 ÷ 734.8 = 32.2%, consistent with the stated 31%.
| Good cause | Prizes | Duty | Costs, retailer and expenses | |
|---|---|---|---|---|
| UK National Lottery (FY to 31 Mar 2025) | 23p | 55p | 12p | 10p |
| People's Postcode Lottery (stated split) | 31p | 40p | exempt | 29p |
| Nationale Postcode Loterij (Netherlands) | 40c | ~37c | — | ~23c |
The National Lottery row is the Gambling Commission's audited pence-per-pound outturn (full breakdown). The Dutch row is derived below.
The trade is stark and runs one way. A charity lottery gives markedly more to the cause and markedly less back in prizes. As a donation it is more efficient; as a gamble it is worse. Return to player is 40% against 55% — see the payout ratio league table for where 55% sits internationally.
The last column is the uncomfortable one. Postcode Lottery's 29% operating expense is nearly three times the National Lottery's combined 7p of costs and profit plus 3p of retailer commission. Charity lotteries lack the scale economies of a national monopoly, and they market heavily.
The National Audit Office made the same comparison for 2016-17 in its investigation into good causes funding: National Lottery gross sales £6.9bn returning about 25p per £1; People's Postcode Lottery £251m returning 31p; The Health Lottery £58m returning 20p — the bare statutory minimum. Both society lotteries were exempt from lottery duty.
The Health Lottery still states that "20% of every lottery draw ticket and online scratchcard purchased goes towards good causes", with tickets from £1. It sits on the statutory floor; Postcode Lottery sits eleven points above it. The difference is a business decision, not a regulatory one.
It also shows how the caps drive corporate structure. It was long criticised for running through many separate regional community interest companies, each with its own licence and annual limit — a structure since unwound, with the regional CICs surrendering their licences between December 2024 and May 2025. It now runs as a single society lottery, so that criticism is history rather than a current description.
A useful correction to a common assumption: People's Postcode Lottery does publish odds. From its own how-it-works page:
Those are genuinely good odds of winning something, and a fair reflection of a 40% prize fund spread thinly. What they do not tell you is the size distribution. The same page describes a weekly prize where "at least 1,000 postcodes" each win £15. A player paying £12.50 a month spends £150 a year; winning £15 counts fully towards "84% of players won a prize". Note too that every odds statement is phrased as "better than" — a floor rather than a value.
Run the expected value instead. At a 40% prize share, £150 of annual tickets returns £60 on average, with £46.50 going to charity and £43.50 to running the lottery. That is the honest description of the product, and it is not a criticism — it is what a donation-led lottery looks like.
The same page compares itself to draw games: "The odds of winning the jackpot in Lotto are 1 in 22 million, in the Euromillions are 1 in 139 million and in Powerball are 1 in 292 million."
Two of those check out against the matrices exactly: EuroMillions is C(50,5) × C(12,2) = 2,118,760 × 66 = 1 in 139,838,160, and US Powerball is C(69,5) × 26 = 1 in 292,201,338.
The Lotto figure needs a note. A single UK Lotto line is 6 from 59, which is C(59,6) = 1 in 45,057,474 per draw (UK Lotto odds). A £2 line enters both rounds of a draw night, so 2 ÷ 45,057,474 = 1 in 22,528,737 — the "1 in 22 million" being quoted. Per entry the odds are 45 million; per £2 spent, 22.5 million. Both are true; this site's game pages always quote per-entry odds.
The postcode format is not a marketing whim. It is the statutory prize cap made visible.
People's Postcode Lottery's terms state that "the holder of an individual winning ticket cannot be awarded a prize greater than 10% of the ticket sales for that particular draw." A multi-million headline therefore has to be shared:
Granularity matters. A full postcode is around 15 addresses; a sector is thousands. "Your street wins" describes the mechanism accurately, and explains why a multi-million headline divides into individually modest cheques.
The Nationale Postcode Loterij, run by Novamedia within the Postcode Lottery Group, is the format's origin and the most generous version of it. It states plainly that "40% van jouw lotprijs naar goede doelen gaat" — 40% of the ticket price goes to good causes (hoe werkt het). A standard lot costs €16.00 per draw under Article 8 of its reglement, with Plus at €18.50 and Premium at €21.00. Note that this is per draw, not per month: with fourteen draws a year a single standard lot runs to roughly €224 a year, which is a materially larger commitment than the UK product's £150.
In 2025 more than three million participants raised €378 million for charity, with €346.5 million paid in prizes (goede doelen).
Derive the rest. If €378m is 40% of ticket revenue, revenue was 378 ÷ 0.40 = €945m. Prizes were 346.5 ÷ 945 = 36.7%. What remains is 945 − 378 − 346.5 = €220.5m, or 23.3%, for costs.
So the Dutch lottery gives 40% to charity and returns 36.7% in prizes — the most donation-weighted major lottery we have found published figures for, and correspondingly the weakest as a gamble.
Buy a charity lottery ticket because you want the charity to have the money. Buy a state lottery ticket because you want a better chance of a large prize. Do not confuse the two.
At 40% and 36.7% respectively, postcode lotteries are among the lowest-returning lottery products in the developed world — by design. The National Lottery's 55p prize share buys a materially better gamble and sends less to causes. Both facts are published by the operators concerned.
Whether the good-causes money genuinely adds to public spending is examined in the good causes claim examined.
Last verified: 2026-08-29