What is The Law for Online Prize Draws?

Let’s cut straight to the chase. ‘Online prize draws’ are not classed as ‘Gambling’ by the UK Gambling Commission. They do not regulate them and they do not provide information on how they should be officially run. Already confused? You’re not alone.

Lotteries & Online Prize Draws (Online Prize Competitions)

First of all, the wording ‘online raffle’ is the term that we (Rafflers Ltd) use to describe online prize competitions. ‘Prize competitions’ is the official terminology used by The Gambling Commission.

For the purpose of explaining the law and to avoid further confusing, we will refer to prize competitions as online prize draws.

Lotteries

The majority of us have played the National Lottery at some stage of our lives! You pop to your local supermarket, buy your tickets and cross your fingers until a winner is chosen. The winner is chosen at random using a lottery ball machine and the winner is contacted. 

A lottery is a form of gambling, outlined by three main elements and requires a gambling licence:-

• Payment is required to participate
• One or more prizes are awarded
• Those prizes are awarded by chance (chosen at random)

If an online prize draw was to follow only these three elements, then it would be classed as an illegal lottery! An online prize draw must be outlined by other elements to be classed as legal. 

Online Prize Draws (Online Prize Competitions)

So what is required for online prize draws to be classed as legal? There are in fact two options for draw providers..

Skill Based Questions

In order for an online prize draw to be legal, the Gambling Commission states that..

“competitions that genuinely rely on skill, judgment or knowledge are to be permitted to operate free of any regulatory control under the Gambling Act 2005”

You may have noticed when entering an online prize draw that the majority will require a multiple choice or single question to be answered correctly in order to purchase a ticket. It is this that removes online prize draws from being regulated by the gambling commission.

This is, however, a slightly grey area. The Gambling Commission also states:-

“there are some competitions that ask just one simple question, the answer to which is widely and commonly known or is blatantly obvious from the material accompanying the competition. The Commission considers that these do not meet the test in the Act.”

In fact, it is stated in the Gambling Act 2005 that the skill based question should be difficult enough to..

“Deter a significant proportion of those who wish to enter from doing so, or. Prevent a significant proportion of those who do enter from winning a prize”

In simple terms, if a question is way too easy, then this will not meet the requirement for the online prize draw to be legal! Furthermore, who decides if a question is too difficult or not? So then, if the skill based question is too easy then there is one more step to be taken to make a draw legal.

Free Entry Route

Online prize draw providers are at risk of being classed as an illegally run online lottery provider if the skill based question is too easy. To completely cover themselves and be deemed as legal it is then an option to add a further element to the entry process. This is a free entry route. The Gambling Commission states:-

“if a competition organiser establishes two equally prominent and convenient methods of paying for entry and one costs less than the other, that is sufficient for the competition to meet the requirement.”

By adding a free entry route (as well as a paid route), this allows the skill based question to be easy to answer. However, the free entry route must be treated in the same way as the paid option. The same amount of maximum entries per person must be the same for both paid and free entries.

A free entry route is most commonly processed by sending a postcard to a specific address with specific details. These should be clearly outlined by the draw provider in their website terms & conditions, or a pop up window when an entrant clicks on the eg. ‘For Free Entry Method Click Here‘ text on the competition page. This text should be displayed at the same level as the ENTER NOW button for the paid route, and it is advised that if this button takes you to a pop up window, a clickable link to the full terms and conditions page of the free entry route is included there.

You can learn more about our VETTING PROCESS here.