I recently wrote quite a lengthy piece on rules for competitions and what compers can do to avoid shady websites. Here’s a quick summary of the rules for running prize competitions in the UK.
Running a prize competition in the UK might seem straightforward, but there are legal rules to follow, especially to ensure your competition doesn’t fall foul of the Gambling Act 2005. The line between a legal competition and an illegal lottery can be thin, so it’s important to stay on the right side of the law. Here’s a breakdown of the rules to follow to ensure your competition is compliant.
What does the Gambling Act 2005 say?
The Gambling Act 2005 (GA 2005) covers gambling, lotteries, and prize competitions in the UK. A lottery is defined under the Act as a situation where participants pay to enter, and winners are chosen by chance. If your competition falls into that category, it will be regulated as a lottery, and you’ll need a license from the Gambling Commission. Operating an unlicensed lottery is a criminal offence. If found guilty, you could face fines, and in more severe cases, imprisonment. Not ideal if you just want to run a simple prize draw!
To avoid this, you need to make sure your competition isn’t classed as a lottery. There are three key ways to do this:
1. No payment required
The first way to avoid your competition being considered a lottery is to ensure that there’s no payment to enter. If there’s no payment, then it cannot be classed as a lottery. The law defines “payment” quite broadly – it doesn’t just mean money but can include anything that has monetary value, like dialling a premium-rate phone number to enter. However, normal expenses like sending a letter via first or second-class post don’t count. The Gambling Commission have also considered that large amounts of personal data, if sold on to a third party, might amount to payment.
So, if you want to run a truly free competition, you mustn’t ask participants for any form of payment, whether it’s money or something else of value. Many organisers opt for a free entry route, which brings us to the next option.
2. Alternative free entry route
If you’re charging for entry, you need to offer a free alternative, which is widely publicised and equally convenient for all participants. This is commonly done by allowing people to enter via post or by sending an email. The key is that the free entry method cannot be less convenient or more expensive than the paid route. For example, asking people to send a postcard is fine, but you can’t make it complicated or costly (such as insisting they use an expensive postal service to ‘put them off’).
Your website needs to make it clear how people can enter for free. The Gambling Commission is very strict on this. If you don’t provide a genuinely accessible (and equally visible) free entry option, your competition could be seen as a lottery, and you could face legal issues.
In fact, you must be sure that the free route is prominently displayed on your website, alongside the paid entry method, so that anyone can easily find it and consider which route to entry they prefer. In your terms and conditions, be sure to explain how this works and how it doesn’t affect the chances of winning.
3. Skill, knowledge and judgement
Another way to avoid being classified as a lottery is by introducing an element of skill, knowledge, or judgement. If participants are required to solve a puzzle, answer a challenging question, or display some form of skill, the competition may not be considered a lottery because winning isn’t entirely based on chance.
However, the skill element can’t just be a formality. The Gambling Act makes it clear that the question or task must be difficult enough that a significant proportion of entrants are prevented from winning. So, if your competition only asks an obvious question like “What colour is the sky?”, it won’t count. You need to make it tough enough to ensure that people have to use some thought or effort to enter. In fact, the measure is that the element must be skilled enough to prevent a substantial portion of people from entering. You would need to have some evidence of this if required.
Postal entry rules
If you’re offering a postal entry method, it must be easy and straightforward. A simple postcard with details like name, address, date of birth, and competition ID is sufficient. Keep in mind that any postal entries must be treated exactly the same as those who pay to enter – no giving preferential treatment to paying entrants!
Complying with Advertising Standards
While the Advertising Standards Authority (ASA) doesn’t directly regulate whether a competition is legal under the Gambling Act, it’s still essential to comply with their guidelines. Make sure your competition is clearly advertised, your terms and conditions are transparent, and your free entry method is clearly visible to participants. The ASA’s codes are important for ensuring that your competition is fair and not misleading to the public.
The above is a brief overview and not intended as legal advice. If you are thinking of running a competition or setting up a competition website, I would advise that you get a legal opinion. Unless all the competitions are legitimate free giveaways, you’ll need this to advertise your site on Facebook in any case. I recommend contacting Victoria Simpkin at Ellis Jones Solicitors for further advice.
You can read my guide for compers to competition rules and avoiding scam sites here.
Jen is a practising Solicitor / Chartered Legal Executive and Commissioner for Oaths, admitted as a Fellow in 2006 and now SRA-regulated freelance. She started working in law in 2000 and her legal experience includes both private practice and in-house. She was Highly Commended by CILEX at the 2018 CILEX National Awards 2018 for Private Client expertise and she has authored work for the CILEX journal, LexisNexis and the Parliamentary Review amongst others.