Cash prizes of up to £25,000 and community grants feature in plans for a new Watford local lottery.

To help community groups and charities respond to a cost of living crisis, the borough council is in talks to set up a “low-cost, potentially scalable funding stream” – despite concerns a lottery could exacerbate “problem gambling” for some players.

Local authority leaders are due to debate setting up the scheme at a meeting on Monday, January 16.

A council report reads: “In the current cost of living crisis, charities and community groups face additional struggles in order to access donations and funding.

“The council is faced with budget constraints and there is therefore a gap between the support needed and the support that the council can provide.”

The document reveals that Watford Borough Council was “approached” by Gatherwell Limited, which already runs similar schemes in next-door Hertsmere and St Albans.

Sixty per cent of each ticket sale would go towards “local causes” with 20 per cent allocated to the prize pot and 20 per cent for administration and running costs.

Mayor of Watford Peter Taylor said: “We have wonderful charities and community organisations in Watford that make a real difference to the lives of our residents and town.

“A local lottery could be a great way to raise funds for good causes here in Watford as well as giving some lucky residents a chance to win significant prizes.

“As we explore this idea it is important to make sure that we are mindful of some of the potential issues but I think on the whole this could be a great initiative that gives people a chance to give back to the town and all the great work that is done here.”

A second report looks at the potential positive and negative impacts of a local lottery.

It reads: “The council must… consider the risk of a negative impact whereby the lottery might cause or exacerbate problem gambling for players.”

If the lottery is launched, Watford Borough Council would set limits on the number of tickets that can be purchased in a given timeframe, and register with the Gambling Commission.

The study also looks at why residents might be excluded from playing the lottery – on grounds linked to religion and where residents do not have a computer or bank account.

It adds that players would be in with a chance of winning a maximum £25,000 prize.

The document reads: “The positive impact of the funds raised will allow organisations to become more sustainable and enable them to support Watford residents.

“According to conversations with local authorities already running schemes, successful organisations can see annual funds equivalent to a small grant award.

“From the work the council does around small grant funding, there is evidence of both the positive impact this has on an organisation in terms of boosting their income and either sustaining or expanding their services to the community.”

Gatherwell claims to support “good causes” to the tune of £5million per year.

Its website reads: “Over 100 UK councils have already started a local lottery with Gatherwell.

“Why? Because this low cost solution empowers local authorities to raise funds with and for their communities.”